From dvdtown.com:
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A lot of debate is currently going on concerning the Blu-ray capabilities of the Playstation 3.

Many people (including myself) consider it one of the best Blu-ray options right now, perhaps only topped by the just-released Panasonic DMP BD30. The main reason for this has been that the PS3 is upgradeable to both Blu-ray profile 1.1 (Bonus View) and coming profile 2.0 (BD Live) and, of course, an attractive price tag compared to dedicated players.

However, many say that the picture quality of the unit is not at par with its stand-alone competition. Being a Playstation 3 owner, my eye caught the following headline in the latest edition of Home Cinema Choice Magazine. "Sony's PS3 is the best Blu-ray player you can buy." The headline was in a "Fact or Fiction" section of the magazine. Guess what: the magazine gave the notion a "Fiction" seal.

The reason they gave: "Increasingly, the Blu-ray performance of the PS3 doesn't really stand up to videophile scrutiny. While its excellent clarity and fine detail reproduction is without question, motion is not the console's strongest point. Fast panning shots in Sony's own flagship 'Casino Royale,' are prone to stutter, whereas the company's own dedicated players render the same scenes perfectly. It is also prone to visual artifacts not seen on the latest dedicated players."
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