basically, the 40gb version will do software emulation of ps2 games. that means that in the future when the playstation store has ps2 games for download, the system will be able to do it, but ya... u cant play ur old ps2 games. So, if you're looking to build a ps3 game library, or love movies and want to go 1080p, then this is what u wnt to buy. I have one of the 60gb systems from launch, and love it. Personally, I find that there are plenty of games for the amount of time I can actually sit and play, so no worries.
So ya, long story short, it cant play ps2 games, but in the future will play downloaded ps2 games.