PS3 is even being outsold by the PS2 and the GBA(in America)
Price and games library. But the PS3 price will drop and the PS3 games library will expand, the PS2 costed 500 Euro (including VAT) at launch in Europe which when taking into account inflation is more than the current 600 dollar PS3 pricetag in the US and close to the current PS3 pricing in Europe including VAT. Currently however with much lower pricing and a large games library over 19 million slimline PS2s have been shipped by Sony Europe, making Europe the primary PS2 market.
The PS3 plays many of those great PS2 games as well, but by itself is not a reason to spend more on a PS3 instead of just buying a PS2. More and better PS3 games are needed to justify buying into Sony's high end Playstation product. More and better PS3 games are underway.