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In theory the PS3 is more than powerful enough to emulate a Wii and the PS2. However to recreate an emulator on the PS3 is a difficult task (if want to go for full potential). For example emulators on the PC would require a lot of redesign to make good use of the Cell's SPUs.

If the emulator can only run on the 3.2 Ghz PPU, you're not using the 7 other 3.2 PS3 Ghz processors which are just as powerful.



Naughty Dog: "At Naughty Dog, we're pretty sure we should be able to see leaps between games on the PS3 that are even bigger than they were on the PS2."

PS3 vs 360 sales