For me, there were 3 main issues:
Space - PS2 is an extra chunk of crap in already limited space.
Reliability - PS2 is a steaming pile of shit, whereas the PS3 is actually very reliable and well-made.
Functionality - No wireless controllers, no remote starting, no upscaling, no anti-aliasing, and crappy video/audio cables.
This is why I bought a 20GB PS3 on eBay for $350 a little over a year ago and then added a 320GB HDD to it.