This ranges from Arcade (0) to Prem/Halo 3 Ed/Elite (full). Note that no single Xbox 360 model can play ALL Xbox 360 games because it's emulated via software emulation.
The 40 gigabyte PS3 has access via hardware emulation to all Playstation 1 titles. I sincerely hope that no single one of you will debate the fact that there are more titles on Playstation 1 alone than the entire Xbox library (probably including both Xbox and Xbox 360). Moreover, given only 300 some-odd titles are supported via the software emulation on the Xbox 360, the Playstation 1 titles supported by the 40 gig more than suffice if it is bargain bin-supported software numbers you're looking for.
More-more-over, the 20 gigabyte Playstation 3 at LAUNCH supported full hardware emulation of Playstation 2 and Playstation 1 titles. The 60 gigabyte, likewise at $600 and $500 post-liquidation. The 80 gigabyte supports hardware emulation of all Playstation 1 titles and somewhere between 70-90% of all Playstation 2 titles via software emulation. That's literally thousands of backwards compatible titles on this model of the Playstation 3.
Additionally, you can purchase Playstation 1 classics on PSN for play on either your Playstation 3 OR Playstation Portable. This applies to any SKU of the Playstation 3.
If you take one snap-shot in time of the Playstation 3 at the release of the 40 gigabyte SKU, yes, you are correct, the Xbox 360 Premium model at $50 cheaper does provide more LAST GEN titles (300+ versus 0), but emulation and backwards compatibility has NEVER been the 360's strong suit and has always been at a disadvantage to the Playstation 3. If you extend the backwards compatbility list to PS1 titles, Playstation 3 40 gig's BC is numerically superior to that of the XBox 360 despite being (subjectively) not qualitatively superior (although, you've got to be kidding me....would you rather play MGS1, Dino Crisis, Resident Evil, FFVII, or Munch's Odyssee and Forza Motorsport?).
Overall, claiming the value-for-game-titles title for the Xbox 360 is a total misrepresentation of the truth. Only if you put the qualifier "only last gen titles count" would you be telling the truth, and only then if you were only considering between the Premium Xbox 360 and the 40 gig Playstation 3.
Anyway, I also agree that the lack of PS2 title support for the 40 gig model was a braindead move and cannot be justified as a cost-saving measure. I've seen a lot of people walk out the door without a PS3 because they wanted this feature. However, the Xbox 360's claim to fame is Bioshock and Halo 3, certainly not it's partial support of the mediocre Xbox 1 library on the hard-drive and internet-equipped models.
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