From arstechnica.com:
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With E3 only a few days away, the rumors and speculation have begun to filter around the Internet; all eyes will be on Los Angeles to see what Sony, Nintendo, and Microsoft have up their respective sleeves. Luckily, we don't have to guess, as we have the support of our very well-informed mole. His information? Not only is the PSP Go real, but we'll be seeing a slimmed-down PS3 in August or September. However, this news likely won't be announced during E3.

Allow us to explain. There are plenty of PS3 systems sitting on store shelves right now, and Sony is planning on sitting back and allowing the supply of those units to dry up over the summer. We shouldn't expect a price cut, but the possibility is certainly there. After retailers are ready for new stock, Sony will begin releasing the slimmer units to retail, although what features have been taken away or added is still anyone's guess.

This isn't breaking news, as Engadget came into possession of supposedly leaked pictures of a smaller PS3 a few weeks ago; the story ran around the tech press quickly. The existence of a smaller PS3 seemed rather unlikely, until the sites that ran the picture received a cease and desist letter from a Chinese company saying that pictures contained "confidential information."
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Full Story: arstechnica.com