Rumors are surfacing of a forthcoming slim PS3.

Sony always size/cost reduces their hardware, so a slim PS3 is obviously coming, it’s simply a question of when.

Engadget also says:

the next iteration of PS3 packages has been all but confirmed during a GameStop conference call recently.

So, the safe bets for hardware revisions:

• Bigger Hard Disk
• DualShock 3 controller with both sixaxis funtionality and rumble
• Newer cheaper, cooler, quieter, and more reliable parts
• Smaller Form Factor

The big questions are:

• When will these improvements hit?
• Will we see original PS3 features restored such as PS2 backward compatibility, 4 USB ports, integrated flash card reader, and SACD support?
• Will we get extras such as DVR features, optical disc writing, and expanded RAM for improved Linux home PC support (Not adding RAM for game use, that would be ridiculous, but special SKUs with extra Linux ONLY RAM)

EDIT: Clarified extra Linux PC RAM Possibility.