IGN are reporting, via a Japanese tech magazine, that instead of using software emulation to allow Playstation 2 games to run on the PS3, Sony will instead incorporate a PS2 chipset into the PS3 to achieve backwards compatability.
They go on to say that once they have perfected software emulation, Sony will then remove the PS2 [...]
"Rumored Sony BC Solution: A PS2 Inside Every PS3" - 06.06.06