Here's my theory that is pretty much based on nothing. The 20gb model seemed to disappear around February. The Euro launch was in March. They probably started production of the Euro model (which doesn't have the PS2 chip) in February. I think Sony halted production of the 20gb in order to manufacture 60gb US/Japan models and 60gb Euro models. If they had continued to make the 20gb alongside the other two models it would've probably been too expensive and complicated to deal with 3 models. I think that as soon as the US and Japan gets the Euro model (therefore eliminating one model line), we'll see the lower end SKU back for sale everywhere. This would explain why there has been no announcement stating that the lower model is dead because it'll be back soon.

Again, this is all just my theory.

 hard drive size has nothing to do with graphics, unless you are saying that to distinguish the 360 and ps3 from the wii, which is also not all about grahics but whatever.  Anyway, Sony is stupid not to continue to sell the 20GB version considering it is the about the same price as a 360 premium with live for 2 years and has the same functionality plus a blu-ray player and slightly more hd space (360 uses more of the 20GB).  

I do not think they will release an 80GB PS3, though. 

The wholesale cost between a 20gb drive and a 60gb is very small, maybe $10 tops.  Yet the price difference in consoles is $100. That's a pretty big pill for Sony to swallow. They would have to sell a lot of games to make up the difference. I don't believe the decision was made on inventory, but revenue. It's almost impossible for them to make money with a $499 PS3 at this time.