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why they would release it with less that 1GB of memory ...


The PS3 uses pretty expensive memory. And you don't actually need so much RAM. You should be streaming textures to the VRAM anyway. Because of that the memory is so fast. The problem is if you come from the 360 and are accustomed to more RAM, porting is very difficult.

^^VRam isn't as flexible when it comes to processing general code as normal RAM is.


VRAM is just used for a completely different thing. Textures,polygon models in GPU, objects needed for AI for example in RAM. Using unified architectures has some advantages but also distinctive disadvantages. (Everyone who ever bought a cheap Laptop with shared memory knows this)