http://n4g.com/ps3/NewsCom-164067.aspx?CT=1#Comments

there lot's of reports that some of the PS2 games that did not work on 80 GB before 2.4 is now working perfectly fine.Mana Khemia is one of those titles.

I personally think that they have improved it again with 2.40 but 100% is not possible I think.

100% will be difficult, due to many games using some tricky programming, but it's not impossible. The closer they get, the sooner we should be seeing software emulation on the 40GB.

Thats good wonder if the 40 gig will also be backward compatibilite later.

I dont think its much of a priority to sony to software emulate PS2 games on the 40gig machines, did they ever say they would at all?

Their time and efforts would be better spend looing at ways to improve and cost reduce the current hardware, then they could maybe introduce the emotion engine and so on back into the hardware at a much reduced cost.

This is good news for 80GB PS3 owners.

wow so inexpected

Looks like it's true. I popped in My disc of EverQuest online which didn't work when I bought my PS3 (november last year), but now it works perfectly.
I have a European 60 GB, but it uses the same BC as teh American 80GB.

well its close enough

YAY!! So this hopefully answers my question.

I disagree with that statement since assuming they stick with a cell architecture for the PS4 (or PSP2), all the coding they would have done with a pure software based emulation will easily carry over without them ever needing to produce another emotion engine again.

Once it is done, the cost to deploy it is negligible, with each console, the marginal cost of developing it is reduced, you get a great feature to attract/retain customers, and you can sell classic games on the PS Store.