thejode, on Dec 8 2009, 12:29 AM, said:
1.) What was the real reason for Sony to stick these options on the PS3? I don't think they intended the PS3 to be run as a Linux computer.
They did actually, as far as I know. Due to the colossal power of the PS3 it was thought people would like to run other OSs on it to take advantage of that power. Unfortunately they locked down the graphics chip, so you couldn't do a lot that required graphical power, such as playing games (otherwise people would buy a PS3 and then play games on Linux

). Plenty of people used them as PCs though, browsing the web and typing documents and the like.
thejode, on Dec 8 2009, 12:29 AM, said:
2.) Why did they eliminate this feature with the new $299.99, slimmed down, 120GB PS3? Could it be that they decided to cancel the project?
To stick with Sony's tradition of removing features from new versions of products rather than adding them? Because they're mean? Who knows? As far as I'm aware there was no technical reason to remove the feature, so either they were fed up with supporting it or just felt not enough people made use of it to implement it on the new slim versions.