Yes it ousold the xbox in its first year. And maybe even the second ?
the PS1 was produced until 2006. Sony produced the PS1 until the PS3 released. The PS2 is even more succesful and will be even longer around. I bet Sony will still produce the PS2 in 2012-2013.
And if they lower the price even more to 69 Dollars it will get a push again. The PS2 is not a threat for the PS3. Nobody on this Planet would buy a PS2 if he wanted to buy a PS3 unless he cant afford the PS3 so the PS2 is only here for expanding the market for Sony. I bet that a price of 69 Dollar would give the PS2 a decent boost.