I got a PS3 120GB - sleek from Landmark, I have connected it to my Sony 32 inches LCD TV. It is working great!
(Earlier I had a blu-ray drive in with my CPU, even then the quality was great, but the control structure was not good and hence playing movies was not easy.)
The gaming works fantastic! Easy to play and use with kids. The wireless controls are easy, you do not need to point them to the PS3. Now that there are movies released over BLU-RAY, it is great to watch, the scenes in DDLJ and Kabhi-Kabhi for example are simply incomparable, you will feel a need for a 42 or 50 inches LCD TV or a projector to watch them.
I wish that all the old Hindi movies are transformed on the BLU-RAY or streamed HD through PS3. Now I’m waiting for Sony to upgrade the firmware to 3D compatible PS3, where you can watch good amount of 3D movies at home!