Shouldnt it be getting the album art when it gets cd information over the internet? Mine does not display it for any of the cd's that I rip into the PS3...

I added it to the MP3 file on my PC before I moved it to the PS3.

Oh ok, so the ps3 wont do it by default on a new cd rip?

You can download album art from the PS3 web browser. Then go to the song or album in the XMB and assign the downloaded pic to the music. In my tests, the pic was properly added it the id3 tags, even before 1.8 came out.