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The only way the 40GB will have backward compatibility is if Sony has managed to be able to accurately emulate both the EE and the GS. They left the GS on the 80GB PS3's for a season. Why? Because it would be difficult to emulate. Part of the reason is because the GS' embedded RAM has an incredibly fast bandwith, even by today's standards. The Graphic Synthesizer has 48GB/s of bandwith the RSX only has 22.4GB/s of bandwith. While definitely possible, a software solution will be difficult to implement because of this fact.
Sony will be running into the same type of problems as MS did with the 360. They would software emulating a completely different architecture. Actually they'd be in a worse situation than MS. The PS2's chipset was a complete custom job. It would be much harder to software emulate than the practically off the shelf design of the original X-box.
