A PS1 classics compilation is definately not going to happen. As a consumer I'd like it. But Nintendo has already set the business model for old games and Sony has complied with PS1 classics costing $10 for download. So here is the problem. Downloadable games probably get Sony $5 or $6 of profit because it's their service and they are essentially the new publisher when it hits their download service they completely avoid costs associated with the retail channel. They like this model and don't want to release PS1 games at less than $10 a pop because then their downloadable games look like rip offs. So you'd see a blu ray disc for $60 with 6-10 PS1 games. And they would probably only receive $20 or less per disc which cuts their per game margin to $2 or $3. It would be a tough sell at that price point unless the consumer wanted every single game. So likely these discs will end up in the bargain bin at $30 before they sold cutting the profit significantly more.
So as a hardcore gamer, I like the idea. But they can't segment the market to make it viable. People that download PSN games would just buy the discs. This would make Sony far less money.
I think it's a similiar scenario with the PSN games. You risk devaluing your product while pandering to a small unprofitable segment of the market. I think the xbox arcade discs serve 3 purposes that don't affect Sony. #1 is a paid download service. I know you can buy the games without paying the fee, but some gamers out there see the $50 annual fee and avoid the online portion of the xbox like the plague. #2 is a model without a harddrive. It's hard to download games when you have no place to store them. #3 All PS3's have built in Wifi and LAN connector. So if you simply have internet, there is no reason you cannot get your PS3 connected. Yes, some people still have dial up. But those people are in the extreme minority of PS3 owners. I'm sure someone has an example of a PS3 owner with dial up who lives in the middle of nowhere. But the general rule is if you are spending $400 on a high def game machine, blu ray player that you simply would not stand for dial up.