PSN only

the first PS3 could run actual PS2 and PS1 CD's and DVD's (1 or 2 model after aswell, but not even all the bulky ones can play those)

Now you can only play PS1 and PS2 via PSN downloads.... glad I have a PS3, PS2 and a PSone not forgetting the PSP, specially the PSone and PS2 as I have a huge collection of original games