Originally Posted by PS3 wikipedia entry
Games
The PlayStation 3 will be compatible "on the chip" with most PlayStation 2 and PlayStation games, without emulation. It still isn't known how Sony has achieved this (although Sony had developed a single-chip PS2 CPU/GPU solution, used in newer revisions of the "slim" PS2). Compatibility with PS2 online games and games designed for the hard drive support hasn't been elaborated upon. In a recent interview Ken Kutaragi has recently stated that backwards compatibility will be achieved through a combination of hardware and software:
"Third-party developers sometimes do things that are unimaginable. For example, there are cases where their games run, but not according to the console's specifications. There are times when games pass through our tests, but are written in ways that make us say, 'What in the world is this code?!' We need to support backward compatibility towards those kinds of games as well, so trying to create compatibility by software alone is difficult. There are things that will be required by hardware. However, with the powers of [a machine like] the PS3, some parts can be handled by hardware, and some parts by software."
Hardware
According to PSM Magazine the PS3 will not be backwards compatible with some of the hardware peripherals of the PS2. Which means that memory cards for PlayStation and PlayStation 2 won't work on the PlayStation 3 hardware. [10]
"We've received a lot of letters asking about how PS3 will be backwards compatible with PS2 and the original Playstation if it doesn't have memory card slot. Well, we have an answer, and it's both good and bad. First, the bad news: All of those old memory cards you have won't be usable with PS3. Okay then, what's the solution? Sony has actually decided to only use Memory Stick Duo cards (the same format PSP uses) for PS3 save data. However, if you play a PS1 or PS2 game on PS3, the system will treat the Memory Stick like it's a normal memory card. This is different from the PS2, which requires you to use a PS1 memory card for PS1 saves. What this means is that you won't be able to use any of your old saves if you play PS1/PS2 games on PS3 (wonder if a DexDrive will work...). But there's an upshot to all this: Downloading and sharing saves via PC for all three Playstations and PSP (hint, hint) will be easy as pie."
It is currently possible to get PS1 and PS2 games transfered to a PSP memory stick using the PSP USB cable. The Datel game enhancement accessory Max Media can be used to transfer them directly from the PS2 to the PSP.
