That is the YLOD. It happened to my 80GB and my buddy's 60GB PS3 over a year ago, we have since purchased PS3 Slims and our original PS3s have been sittting in our basements collecting dust. But last week I decided to fix mine by the reflow method...works fine so far. I plan on fixing my buddies this weekend. It is actually quite easy to fix...I did mine over the course of a Saturday morning following these videos: http://playstationlifestyle.net/forums/showthread.php?t=2376&page=1

Basically, you take the PS3 completely apart (which was kind of cool), remelt the solder around the main processors with a heat gun, reapply thermal paste to the processors, then put everything back together.

More information here on reflowing (easy) and reballing (hard): http://ps3repairman.com/ps3-repair-services/ps3-reballing-service