The New PlayStation 3 System Update Improves Backwards Compatibility. PS3 v1.5 allows you to play old games on your new system better than ever.
The most notable change is the improvement in the appearance and display of all PS 1 and PS2 games while being played on the PS3. Prior to this update, previous generation games played on the new console would look worse than when being played on the original platform. The suggested fix to the situation was simply to switch to composite cables and play the old games in their old interlaced formats.

 With the version 1.5 update, gamers can now finally enjoy old software without have to downgrade to old TV technology. Looks like a good move my Sony, finally old games can be played without much problems