Yes, PSN network does work well from India. Infact all prices of purchases are available in INR in the Playstation Store.

I use it regularly from Bangalore. I have Airtel WIFI at home and my PS3 uses it. Do add me up as your friend. My PSN id

is asheeshjoshi

Some PS3 games that I have with multiplayer online mode are RDR-Red Dead Redemption, Uncharted 2 - Among Theves, Assassins Creed 2.

I do get onto the RDR free from mulitplayer mode and see other people ( mostly from US ) .