Hi guys, I'm the proud owner of an 80GB model and I'm here to prove that the emulation chip inside mine rocks. Don't forget, that Sony's website does a very depth check via a search engine to tell you problems with many games.
Yet from my research this past week, it's actually far superior than the Xbox 360's Backwards compatiblity by far. For Example, find a copy of Mega Man Anniversary Collection on Xbox and PS2....play both on the PS3 and Xbox 360...you'll be amazed. The Xbox 360's 2D emulation is very weak, while the PS3 seems to adore anything old school and new school.
Genma Onimusha (from Xbox playing on Xbox 360) Vs. Onimusha (from PS2 playing on PS3)...is a major leap too....the Xbox 360 has many lines striking through the menu screen. While the PS2 looks astounding with no problems what so ever.
Another feature I'm really admiring is the fact that mimics the PS2/PS1 memory card to a tease when you create the files and you can put the PS2 or PS1 game in "Full Screen" mode for a rich and gorgeous picture. (Mega Man X4 from the PS1 is a prime example of how sweet it looks)
However, every single 2D game I've tested with my 80GB works beautifully. It loves CVS2, Capcom Classics, Taito Legends 2, Art of Fighting Anthology, Fatal Fury Battle Archives, etc. She loves Guilty Gear, Marvel Vs. Capcom 2, and yes even the Street Fighter Alpha Anthology.
I know it sucks having an emulator over the actual chip, but Sony is hard at work to make sure each game works properly.
http://www.us.playstation.com/Support/CompatibleStatus
Here's the Compatible Status link, you just type in the name of the game and click on which PS3 you have, and it will tell you in detail what it may have.
Now if you were to say to me "Well Mega, which one would you perfer?" I'd say stick with the 60GB. I picked the 80GB because of the extra space and the free game of Motorstorm, plus all I care about is newer games on my PS3.
So to break it down,
60GB = EE Chip
80GB = Emulator
40GB = No BC