The PS2 emulation which removes the Emotion Engine chip and replaces it with software is the issue that has the greatest impact on backwards compatibility. However, the technological advances and game-play improvements delivered by the PS3 should temper this.
So.... we won't really want to play our dozens of favourite and well-loved PS2 titles because the new shinier versions we can pay another $100 to play will make us forget about them?
...
"Well guys, the press is pretty bad - everyone's predicting the PS3 to flop. Underpowered, vastly over-priced... and yet there are still a few people who think we'll come good, and that the backwards compatibility that helped establish the PS2 early in the marketplace will provide a natural upgrade path.
Men, we need to crush that hope! Severely limit the PS2 compatibility, and do it now! The European territories must not find any reason whatsoever to choose us over someone else!"
98% compatibility to 'limited'. $1000 for the privilege. Sony, you've lost the last of your mind.