FishyJoe has it right, and I'll add a little illustration to shed some more light on the subject.
This is a wafer of chips. They produce the Cell and RSX chips like this. Let's say, for shits and giggles, that at 90nm, they can make 100 Cell chips on one wafer, and it costs them $10,000 for the entire wafer. When they switch to 65nm, they'll be able to produce twice as many chips on one wafer. So, instead of making 100 90nm chips, they can make 200 65nm chips, and it'll still cost them only $10,000 bucks. So, they pretty much save 50% on that one component by switching to 65nm.
Also, to accomodate the change, they must also change the motherboard of the PS3. A smaller chip uses less power, takes up less space, and requires less resistors, so when they remake the motherboard, it has less parts and costs less to make. So they save more money on the motherboard, too. This is why the slimline PS2 is so small, they are currently running on 45nm processors.