Some time ago Kutaragi said they want to incorporate the next gen HDMI into PS3, the problem was that it wasn' t finalised at that time.

Right now it' s been finalised , it' s called HDMI 1.3 and supports 48 Bit Colour Palette and it is in PS3 specs as of right now
-in comparison 360 is 24 bit.

Another thing is that, while you can decode DD truHD and DTS HD (next-gen surround formats) on your receiver with toslink cable - those formats will be carried in their native form only through HDMI 1.3 - which means PS3 has another edge over 360 - uncompressed surround sound.

At least now you see why they need blue-ray for games.

I may be a Sony hater but I love good hardware and this sweet little twist in PS3 specs is very nice.

While it means nothing today - this could be a huge thing for PS3 in the near future.(HD TVs supporting it will come out in Q4 2006)

Here' s a great and in-depth story from the one and only I G N :)

http://gear.ign.com/articles/715/715311p1.aspx