Second week with the PS3 with an update on gaming and HD playback. Unfortunately, I was unable to find any Bluray videos for rent at my local video store. I was told "not to hold my breath" for BD and HD-DVD content to come in. With the format war between the two standards, it makes little sense to stock titles, since they don't want to get stuck with movies they can't rent out. I went to HMV and picked up Full Metal Jacket, Stanley Kubrick's Vietnam War film, well known as one of the best Vietnam films out there. Full Metal Jacket was filmed using 35mm stock, which is standard. It was released in the 80s so the quality is not as high as more modern films. HD playback however delivers something closer to the theater experience than DVD does. You'll notice film grain in older movies, which is evident in FMJ. The PS3 does position itself well as one of the leading Bluray players on the market. I tried the movie in both 720p and 1080i using my computer monitor (HDMI-DVI) and my HDTV (component video). Both looked good. You do not need an HDCP compatible TV to play movies in these resolutions. It's only required to play movies at 1080p. My HDTV is 768p (1080i compatible) maximum resolution and my monitor is 900p. Unfortunately, my monitor cannot handle interlacing so the video did not look as good due to the fact that LCD displays by nature look best at their native resolution. The PS3 is only capable of outputting NTSC/PAL, EDTV, and HDTV resolutions, not VGA ones, which is unfortunate.
Audio quality is also better than regular DVD, up to 640kbps Dolby Digital 5.1 for FMJ . The stereo system in my den is quite old and only offers analogue RCA connectivity, so I didn't get to enjoy the full surround sound effect. The TV in our living room has a 5.1 system but it is not an HDTV. Our HDTV is in a bedroom and uses it's own built in speakers, which are no good for HD audio.

One of the big problems with the PS3 is lack of games, and also game pricing. Interestingly, the Sony Store sells games at $60 each, and sometimes cheaper. Major retailers however sell them for as much as $70. I should note that Sony is directly selling their games for the CORRECT price. Major American retailers are selling their games for $60, while their Canadian counterparts are selling them for $10 more. With the dollar the way it is, the games should cost the same, so Canadian retailers are overcharging. If you want to buy PS3 games, buy them from the Sony Store.
While on the subject of games, there one problem with the PS3 is still a lack of quality titles. The problem is supposedly that the Cell is difficult to program for. However, there aren't a large number of Wii titles yet either so I wouldn't be too concerned. Rachet and Clank and the Simpsons Game should ramp things up for Christmas being less serious, fun titles.
BD also has the same problem. There is a lack of quality movies available on BD, and HD-DVD as well. The studios are directly at fault for backing only one format over the other rather than releasing movies on both, which makes more sense.

One last PS3 thought. The 40gb model is coming out next week. I changed my mind about it. I would avoid this model until more PS3 games are available. Buy the PS2 instead if you don't already own one. Lack of backwards compatibility combined with lack of PS3 games make this console not a lot of bang for the buck. The 60gb model with full hardware BC is still the best choice for non-PS2 owners, while the 80gb has been going on sale lately and can be picked up for around $500 in some cases.