I think the downgraded version would be too difficult for you to understand
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The downgraded version is just the good version without the memory card reader, wi-fi, a 20 GB hard drive instead of a 60, and no HDMI interface.
In other words, no point in getting it.
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Of course there's a point in getting it. You don't need HDMI if you don't have an HDTV with HDMI cable connectivity (which most HDTV owners do not have). You don't need WiFi connectivity if you don't have wireless internet. You don't need the memory card slots if you don't want to upload pictures to your PS3 (it's that type of memory card, not the type consoles typically use, I'm pretty sure). You also don't need a harddrive bigger than 20 gigs on a console if all you really want to do is play games and watch movies.
Personally I'm getting the $599 PS3, but the $499 version is still a viable alternative. It still contains a harddrive, wireless controllers, online connectivity, and the ability to watch Blu-Ray movies.
As for the interface, yeah it does look nice. Apparently the PS3 will be running Linux as an OS, so the ability to browse the Internet and whatnot is absolutely possible. Can't wait for November. (w00t)
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I've heard that Apple was involved in the software of the PS3... not Linux