Backwards compatibility is a fantastic feature. Depending on how it's set-up it can let you continentally experience a greater library of games with little to no additional effort, and gives people chances to catch things they may of missed, usually at cheap prices.
Also there’s some added benefit of playing legacy games on a newer system. The Advance SP’s backlight was just as useful for GBA games as it was for GB and GBC ones. (No more fighting over who gets to sit under the lamp) And both the 360/PS3 upscale older games.
To kill it just to hit the $400 price point seems absurd. $400 isn’t cheap, it’s still fairly expensive, especially for when you’re losing a very useful feature. Even more so when the PS2 is still a strong system, and can help offset the PS3’s currently weak library.
This will also generate more confusion amongst consumers. Four retail configurations in North America in less than a year? Two which had full backwards compatibility, one that has partial through software emulation and one that has no compatibility with PS2 games at all? Not to mention the other differences.
I was turned off when I found out you couldn’t plug in your old controllers and memory cards (two GH controllers, sister plays it all the time). I’ve got limited shelf space and I’m not giving up my PS2 anytime soon since there’s still plenty of titles I want to play on it, so if it breaks I’m more inclined to get a Slim PS2 over a PS3.
EDIT: In response to people wanting "new games, not old games" if you haven't experienced it, it's new to you. What if someone with a PS3 trys MGS4 despite having missed the previous titles in the series and wants to find out more about the story. He can't try 2 or 3 without hooking up his PS2 instead. Same can go for Silent Hill 5 or Devil May Cry 4. Neither of which are as a big a seller, and more likely have people wonder about it's previous titles.
If HD/Blu-Ray players didn't also play standard DVD's, they'd be selling far worse than they are now. And if the masses of movies that were on VHS didn't get moved to DVD, I'd still be using my VCR on a regular basis, because I love "old" movie as many of them trump everything that comes out these days.