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Sony should definately rip Nintendo off here, But go with the 2nd option - sort of. But instead, make it compatible with both PS2 and PS3. Drop PS2 down to $99. If they sacrafice ps3 a little bit, they make it up on PS2, so it doesn't hurt them.

Make the new games (theyd need a few party type casual games to launch) for the periferal multi compatible, so the game on PS3 outputs Hi def, but the same game(a PS2 game). I bet they could configure thier emulation software to do this- but developing the games compatible with the emulation from the get go. Would get people on the bandwagon of PS2, but have incentive to upgrade to PS3 at a later time. As well as making the periferal 'better' than wii with the hi-def, instead of inferior like it would be going wii vs ps2. And you'd think it wouldn't be too tough for EA to put the controls as an option into PS3 Woods' and Madden, ect.

It really would put nintendo back in its spot as last-gen technology.(and sell more PS3s) And possibly kill wii.

I'm willing to bet theres many PS2 owners that would love to try out wii motion sensing controls, but $250+limited stock is too much trouble/investment.

The additional benefuit is that it will likley get more wii games ported to ps2 from third parties, (who are now starting to invest heavily in wii.)