1. PS3 does not play DVDs.
The PS3 does play DVDs, it just doesn't upscale them (at this time).
3. Inferior audio quality.
Through HDMI, the audio quality is the same. The Panasonic does have the advantage of 7.1 analog outputs for those without HDMI; the Panasonic will also apply [optional] bass management to HDMI output and analog output, something the PS3 can't do.
The PS3 already decodes Dolby Digital Plus and TrueHD, and both the PS3 and Panasonic will decode all advanced audio codecs with a software update.
The Panasonic BD player will play DVD-Audio disks, but won't play SACDs. The PS3 will play SACDs, but not DVD-Audio disks.
The PS3 is the first product to use a HDMI 1.3 transmitter, so it can be updated to output Dolby TrueHD and DTS-HD MA through HDMI [on titles authored in basic BDMV] to a future HDMI 1.3 receiver for decoding. The current firmware on the PS3 limits the hardware to HDMI 1.2 functionality, but that will almost certainly change next year.
4. Inferior image quality.
I think the two are pretty close. The Panasonic may have had a more significant advantage back when CUE wasn't an issue, but the more recent firmwares introduced that. No BD player has perfect PQ output at the moment. I would give the Panasonic an edge, but I think the difference is more subtle.
The PS3's image quality is likely to improve with a future software update. In addition, through an interview, Sony announced plans to add 1080p24 to the PS3 in 2007. The Panasonic's BD output may improve if they eliminate CUE, but the current model is unlikely to ever support 1080p24 output.
One key advantage of the Panasonic is the bundled remote control and IR receiver, so it can be used with any universal remote out of the box. Getting IR (or a universal remote) to work on the PS3 is a real hassle -- it requires a discontinued PS2 IR receiver and some tedious key remapping.
The key advantage of the PS3 is upgradability. All the current standalone BD players are unlikely to see much vendor support beyond 2007. Sony intends to support the PS3 well past 2010, so it will continue to see regular software updates to improve its functionality / performance. The PS3 will fully support the BD-Java Live profile with a future software update, whereas the Panasonic's hardware is incapable of doing so; whether any Blu-ray titles will use that functionality in 2007 remains to be seen.