This is definitely good news, and way overdue. I think Sony's continued support of the PS2 has had a negative impact on PS3 sales, particularly in the U.S. where most parents are ignorant of these things.
I still don't get if the psp emu works for all games, or just some
Right now only Minis work on the ps3. Most likely PSP games won't run on PS3 itself until they retire the PSP or when the rumored PSP2 is released, and even that is unlikely since the PSP2 would probably have BC with the original.