To add to the great comments so far I would say that the ps3 can stream music and movies fine, as well as play them from its hard drive (or an external). The question is does it do it easily enough for anybody to use it? I don't think it does.

Playing stored music works fine, except that if you stream it it doesn't always respect the order of tracks in albums if the file name isn't matching the track title. There might be an issue as stated about storing files bigger than 4GB on the hard drives though, I haven't looked into it yet. I heard there's way to get around those limitations but is it worth the trouble?

I think the ps3 is great and does do a decent job as a media extender, but it's not the best and easiest by all means. I think an HTPC would allow better customization. The only problem I have with HTPCs is that they don't do a great job playing blurays yet since the software is crap right now.