People always criticise this without doing any reasearch and don't seem to realise that Sony would've done anything they could to keep them in there. I end up explaining this all the time. This has been gone into in much more depth elsewhere.
The PS2 used a somewhat complex CPU nicknamed the "Emotion engine". It also had an even more unique graphics chip. Both of these items needed to be put into the first PS3's which came out.
Sony had put an incredible amount into the PS3 and it wasn't being noticed by the consumer. Blu-ray was not the HD format standard at the time, WI-FI was just seen as an optional extra, people were over looking the fact that it's standard model had 60gb compared to the 360's 20gb. It had card slots on the front for Memory stick, SD and compact flash. It had the cell chip, which cost a lot. It had HDMI support as standard. The thing had been made to not break down and some do yes, but far fewer than the cheaply made early opposition ones.
Sony was losing a lot and I mean a lot on every console, but were trying to bring us the future. The cost of the console was starting to cause MAJOR revenue issues. There wasn't enough first party software to pick up that revenue slack at the time.
Something had to give and the emotion engine and graphics chip support for the PS2 was on the 'very expensive' list. PS2 was still selling INCREDIBLY strongly, (still doing okay). So they had to cut it out and put a little money into the far cheaper R&D of emulation of an amazingly complex chip architecture. At least it looks like the fruit of that may yet please an unsatisfiable public. Or will it?
Seriously, if people are still going to kick them over this, I'd like to know your grand plan please?