Playstation 3 Backwards Compatibility and Upgradability

The firmware should only be especially relevant if you have the 80GB model that implemented software emulation (which was comparatively poor at first, although I believe newer firmwares improved it some). The earlier 20GB and 60GB models actually have the CPU and GPU of a PS2 onboard, so it's practically working natively, and that'd be the best approach. The newer firmwares do not disable this functionality.

All PS3 systems can play PS1 games on all firmwares (it's all software emulation, which is trivial for a system with the PS3's horsepower), so this shouldn't be a concern.

Note that Sony actually keeps a database on what works properly. The support isn't 100% across the board for any variant of the systems - there are a few games that are buggy.

The hard drives are upgradeable relatively easily, and there's built in backup and restore functionality.