Wow, lot of misinformation in this thread.
Yes, the PS3 supports surround sound standards that include 7.1 surround sound.
These standards have slightly different names than "Dolby Digital Surround Sound" or "DTS" to separate them from the 5.1 surround sound standards I just mentioned. They are, however, developed by the same companies I just mentioned.
It is up to the game or video publisher to decide if it is supported.
Some of these 7.1 standards are compressed over the optical connection. Some are not, and go over the HDMI connection.
Not all receivers with an HDMI connection can accept the above mentioned HDMI uncompressed surround sound standards. These are separate features.
If your receiver supports 7.1 and you have the proper speaker setup and you are playing 5.1 audio (NOT ALL CHANNEL STEREO OR DOLBY PROLOGIC AND THE LIKE), the additional rear center channel speakers will not play audio. This is by design, as 5.1 and 7.1 standards are discrete channels of audio.
Read your PS3 manual to see what is supported out of the box. Check the changes made in firmware updates here or on the PS3 web site to see what standards have been added subsequent to launch.
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