The PS3s DVD playback is just average in my opinion. For DVD, I much prefer my older dedicated player (I rarely watch DVDs anymore anyway).
However, as a Blu-ray player the PS3 is without equal in my opinion.
- It's fast
- It's compatible with all (Region A) discs
- Firmware updates are very quick and easy to install
- It can decode all lossless audio formats and mix with secondary audio
- No extraneous video processing that alters 1080p/24 output
I made the mistake of jumping into Blu-ray with a standalone player which was very slow to load discs and some wouldn't even play correctly. Jumping ship to the PS3 was a HUGE improvement. All discs loaded quickly, all the features worked, skipping backwards and forwards during the movie was nearly intantaneous, and the PQ was more natural looking.
I was originally skeptical that a gaming console would be the best choice for a Blu-ray player but boy was I wrong. It's fast, fully compatible, and has the very best PQ. In the world of DVD, more expensive players could often net you improved PQ, but that just isn't the case with Blu-ray. In fact, expensive players often add processing that alters the PQ. The PS3 spits out HD video exactly as it is on the disc (no tampering!).
I absolutely love my PS3 and would never consider another player. As a bonus, the machine can do lots of other stuff too.