Oo! I just got a 60 gb PS3 bout a month ago! I can help!!
1. Can you play all playstation 2 games on it? I heard that some don't work.
Only on the 20 and 60 gb. The 80 gb is about 75% compatible and you have to download patches onto your system, much like 360.
The 40 gb is not backwards compatible at all.
2. Can you save ps1 & 2 games to the system or do you need memory cards?
The only time you need a memory card is when you plan on transferring data from an old memory card and even then you need an adapter. On the hard drive you can create a PS1/PS2 memory area.
3. Are they well made? They cost too much to have to get more than one. I've never had problems with my ps1 but all my friend's ps2s are messed up in some way.
Pretty well made. Some launch models have some problems but I got a refurbished one and it's working fine with no problem. Others are reporting great success as well.
4. What is the best model? I heard of the 80gig and 40. Are there others?
Depends on what you want. If you just want a Blu-ray player and play PS3 games, 40gb is perfect. 40gb doesn't play PS2 games.
80gb is perfect if you plan on downloading a lot of stuff like movies, music, games, but not the best if you want to play PS2/PSX games.
60gb is the BEST in my opinion. Lots of space, 100% backwards compatibility. Only bad thing about this is it's discontinued so you can only find it refurbished/used.
20gb is the same as the 60gb. I can't remember if it has wifi or not but it's just smaller version of the 60gb. Only available used now.
I love my 60gb. At first I hated the PS3 as a system and the marketing for it sucks, but an opportunity opened. I had store credit, a gift card, and I get employee discount and ended up getting a $430 used system for $130. Games are pretty fun. I love Heavenly Sword and Folklore.
Definitely worth getting if you can get a good deal or find one.