I notice that sometimes it seems a bit warm in my entertainment center after extended play sessions and I just want to make sure it's ok. My PS3 is on it's side with about 4 or 5 inches on each side, and probably 6 inches behind it, and the back of my entertainment center has a large hole in it for cables, so the back isn't completely closed off. I can re-arrange some stuff if necessary, but is it? Perhaps the PS3 just gets warm and heats stuff up around it. How much space should it have? Is it better to have it vertical than sideways?

Vertical seems like the best idea, unless you somehow put it flat on stilts. Vertical gives you move surface area with air, but exposes the top vent to dust.

EDIT: Your distances are fine.

i dont know how much space you should have but my ps3 has got clear air all around it. i have never noticed it to be hot apart from the time my bro moved it to over by the radiator fro some reason whilst the heating was on

alright, good to know that I've got enough distance.

If it helps, I've had a 60G since shortly after launch and it gets ungodly hot. I've played it for 20+ hour stretches and haven't had any issues yet. I also know someone who's had his on since Jan 07(Folding@Home when not gaming) and his is doing well. Mine has about the same air clearance as yours does, so you're probably fine.