They changed to the slim because they saw an opportunity to use the 45nm Cell chip from the original 90nm, its cooler, less power hungry and uses half the materials. And with this change of processor, it affect the rest of the system, they could have put the smaller Cell into the old box, but they remade, re-branded (Slim), re-marketed and re-hyped the PS3. So we end up with a smaller console that is less power hungry, less noisy and cheaper and a lot easier to promote.
They would have lost a lot less if they didn't include the BR drive but hell they won that format war, and ffs if blu-ray will be as pervasive as regular DVD or CDs are, thats a shit load of discs for a lot of years. Of course DVDs will be with us for a long time still, I don't see local ISPs for example handing out Blu-ray 25GB discs with 10Mbs of marketing bullshit inside anytime soon. That is a long ass tail strategy with the BR format.
If HD-DVD won, Sony would have been fucked, having spent so much trying to own that market just to be forced to use HD-DVD themselves. In that sense, the financial loses is worth it, just like the Microsoft loses were worth it, because they beat the Playstation at its own game, well this gen is not over yet. It'll be fun to see what happens.