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.