The cost, never mentioned the p****.

It's probably what's inside of it and the features. The $400 PS3 may have less features than the $500 PS3.

I think its the hard disk space

Hold on! Things have just changed quite a bit in the PS3 realm. The $400 PS3 no longer has Backwards Capabilities, so if you want to buy this cheaper PS3, you need to keep your old PS2 if you want to play PS2 and lower games. Also, it only has two USB ports as opposed to four. It also has a 40 GB hard drive, where as the $500 one has an 80 GB. The 80 GB comes with Motorstorm while the 40 GB comes with SpiderMan 3 (The Movie on Blu-ray, not the game.). You also won't get an SD card reader with the cheaper one. Frankly, I'm getting tired of how they keep changing the PS3, and it's really starting to turn me off from buying one in the future. I'd much rather buy a gaming console than some thing that's going to be outdated in a few months.

I suggest looking on Sony's official website for things like this from now on, but here's what basically happened. There were the two main models originally, the 40GB and the 60GB. The difference was that the 60GB had 4 USB ports, whereas the 40GB had 2, the 60GB had multiple flash card readers whereas the 40GB did not, and the 60GB had the Emotion Engine, a hardware layer that provided almost perfect backwards computability, whereas the 40GB had no backwards compatibility. As you can understand, the Emotion Engine chip is expensive, and put Sony out of a LOT of money. Fairly enough, Sony redesigned the PS3 to save money. They added 20GB of space in the new 80GB, but replaced the Emotion Engine with software based compatibility that piggybacks off the PS3s more than capable cell processor. This reduced backwards compatibility about 20%, but the 80GB still retains most of it. I've not had any problem with compatibility so far. In short, the difference between the 80GB and the 40GB is the same as the differences between the 40GB and the 60GB: 2 vs 4 USB ports, backwards compatibility, FLASH card readers, and SACD support. Note to Calehay: Please do more research before you libel a system and company, not to mention answer a question incorrectly. This was not updating the PS3, you have no need to change anything if you currently owned a PS3. The 40GB is still the same as it always was, and the 60GB-80GB "upgrade" was really more of a redesign that has mostly the same features, minus one expensive chip replaced by very good software that will be continued to be upgraded online to further enhance backwards compatibility, and 20 more GB of space.