I don't know about emulated games like retro games, or maybe other games gotten through other means but(!)... . It can act a PS3 controller connected through Bluetooth of course, and there is this (what you might be looking for):
http://en.wikipedia.org/wiki/Remote_Play

(check the first 3 links u see, not the sub links below them)maybe here u'll find the answer.

->> http://www.google.com/search?q=play+PSP+on+PS3&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a

Hope this helps

I would get the Move version if you can afford it. It has the most memory, around 350 gigs and is about $400 I think. Only reason i suggest that is the step down has much less memory and is $100 less.

Regarding the emulation, I can't be too positive, but I was able to get a copy of a game I had on my PSP on to my PS3, so in theory it is possible to move the game to the PS3 even if it shouldn't be there. I can't be too positive, as I've never tested it. The main reason being I leave my emulation to the computer alone.

The PS3 is ridiculously hard to mod from what I've been told, so I've never attempted it, as it can really f*** with your system.

I am about 85% positive though that emulated games like PSX games should definitely be able to work on the PS3 as well.

And yes, they do communicate, but I think you need to connect the PSP and PS3 by a USB cable, if I remember correctly. If you get a PS3, you will have to tell me your PSN =P

Davideo7 : from what i read all ps3's can play ps1 games but like usermike said there were problems so sony never enabled it on the slims,like i said people jailbroke there ps3's and one of the things they did was re enable old game compatability,but sony patched all ps3's and are remotely deactivating the ps3's found to have the jailbreak so its not worth it.
All ps1 and ps2 games sign you out whether its a disk or download version.dvds sign you out including blu rays so i guess user mike maybe saw someone watching a film downloaded to there harddrive as they dont sign you out,or they were on lovefilm which i also think allows you to remain online.
I dont know about memory cards,maybe an adapter like mike said.the only option i know for sure is you create an internal memory card,so you set aside a chunk of harddrive and assign it as slot 1 or 2.
I dont have a psp but i thought it connected wirelessly.

Bobbynibbles : I don't really have interest in the Move, I've already got Kinect which is far superior (and I already have a Wii).


legacyme3 : I do have cords for my PSP which hook it up to the TV but the cords don't reach from my couch and I just don't like having a bunch of cords in between me and the TV even if they did reach, especially since my daughter will be crawling soon and the living room will be where she'll be located most of the time and baby's love grabbing anything they can get their hands on lol.

I was only suggesting it for the much larger number of gigs in the Move version.

Bobbynibbles : Ok I see. Yeah my budget is probably around $300 and that would be out of my budget unfortunately.

Just get whichever ones have backwards compatibility for ps2 and ps1 games.