PS3 Is going to to use Blu-Ray Discs.  PS2 and PS1 discs are not Blu-Ray.  It is my understanding (which could be wrong)  That Cds, DVDs, etc. will not play in Blu-Ray Drives. 
Like JoyMonkey said, that's not true.  BluRay drives are fully backwards compatible with DVD and CD, except for ram and +rw as mentioned.