I know they dropped it to cut price on the PS3.

But don't you think it was to keep the PS2 selling well too?

You can get international version of 80GB for 389€.

http://www.capi-online.fi/epages/Capi.axl/?ObjectPath=/Shops/Capi/Products/220135

http://www.jimmspc-store.fi/tuote/1003143

etc.

They could just make some emulation SOFTWARE and put it in a update that doesn't cost anything...Or not atleast much.

They put it out of the PS3 so more people would buy a PS2, remember that they are making profits with the PS2's.

Its because of the ps2....which is making up slightly for what the ps3 loses

Simply put, because the PS3 is too expensive to manufacture, and the PS2 chips the PS3 used for BC cost money. Removing the PS2 chips probably also allowed to make a smaller motherboard.

When Sony realized the $600 / 600 € price was not working, they scrambled to cut the production cost and the result was canning BC.

@Deneidez: Those are imported from where ever, and "international" version implies they even come outside Europe.
I already mentioned that it would need to be imported through official channel. You can get a Wii for 229 (if i recall), but it still stands at 269 as its general price in the retail.

Why would you wnat to play old games from PS2 if you got so many new games on PS3? I got 60 gig PS3 wih B/C but probably never going to use it for PS2 games.
Ps2 is so cheap, get it if you really need to play old games.

I am pretty sure that example verkkokauppa doesn't import their consoles.

http://www.verkkokauppa.com/popups/prodinfo.php?id=16755

Well, if you check the price in nearest store its more like 500€+. Anyway you can get it 'a bit' cheaper, but you are correct that its not the current price.

Upscaling, being able to get rid of your PS2, less consoles and cables around the TV, one controller for all games...