Mr. Lempel (Director of PlayStation Network Operations) posted this on their official blog.
I hope and also heard thet they are continually improving the upscaling of ps1/2 games and expect they can get an improvement of 20 - 30%. It would be nice to see all ps3 games upscalable as well.Hey everyone, you told us you wanted to hear about updates a few days in advance, so here’s a quick heads up that we have a PS3 firmware update in the works. Scheduled for release in the next few days, firmware 1.82 is an update that enables the playback of AVC High Profile (H.264/MPEG-4) files. As most of you know, these are high quality files that you’ll now be able to play on your PS3. Hopefully this update is moving us closer to the audio playback features many of you commented about in my post the other week. We’re continuing to evaluate and improve things across the board, including PS2 software compatibility. I’ll chime in here quickly with an update once the firmware is live and ready. Thanks for all of your support and feedback, keep it coming!