According to this Gamasutra news item, Sony Computer Entertainment Europe is going to release a 399 Euro PS3 (that's a 200 Euro price drop) with a 40 GB hard drive and no backward compatibility with PS2 games.

The most significant exception, according to SCEE, is that the new model is no longer backwards compatible with PlayStation 2 titles, reflecting what SCEE says is a "reduced emphasis" on the feature among later purchasers of PS3, and promises a total of 65 PS3-specific titles to be available in the region by Christmas.

So, PS3 sales figures are lower than anyone except Sony expected, and then when a new cheaper PS3 model comes out without a feature that requires special hardware, we are supposed to believe it is because gamers asked for the ability to do less with their hardware, and not because it would reduce manufacturing costs? This from the company that made up half a dozen lame excuses for not including rumble support in their controllers at launch? That created FUD about backward compatibility when Microsoft had trouble with it during the Xbox 360 launch?

I don't think I am ever going to believe another official statement from Sony.