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Domo-Kun said:
I picked up my 20 GB used for $350, with two controllers and Dark Kingdoms (GAG).

I'm thankful every time I power it up that i bought it when I did, the non-BC would be a deal breaker for me for sure.

That being said, I understand Sony slashing EE to cut production costs, but I don't understand exactly why they can't just update the 40GB SKU for emulation, since the 80GB runs PS2 by way of software.

It's actually half software, half hardware. The 80gigs have a graphics chip in them, whereas the 40gigs don't. And this chip is needed to run PS2 games. Read Fazz's post a few posts up.