Yes, a Playstation 3 can play a regular DVD. All Playstations can play regular DVDs.
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No as the PlayStation 3 Blu-Ray discs are too large to fit in the DVD slot on the PlayStation 2, although you can play most PlayStation 2 games on American PlayStation 3's and around 50% of PlayStation 2 games on European PlayStation 3's.
No, they cannot. But you can play PlayStation 1 games on a PS2, and PS2 games on a PS3 (but on later models, the PS3 cannot play them).
No. PlayStation 2 Systems play DVD/CD based PlayStation 2/1 discs ONLY. PlayStation 3 systems use Blu-Ray discs for all PlayStation 3 Software (PS2 still works on certain models)
You can not play PlayStation 3 games on a PlayStation 1, but you can play PlayStation 1 games on a PlayStation 3. All of the PlayStation consoles are backwards compatible.
It depends on what your looking for. If your looking to save money, then its the playstation. Both consoles cost the same now but you need to pay for xbox live if your looking for online play. If its online play, then its xbox because more people play it. If its solo play then Playstation. Graphics are better. As well as games like Uncharted have great campaign modes. If its movies, then its the Playstation. It has a Blu-ray player and its superior to regular DVD players. I have a playstation because I have friends who had their xbox or game break and had to buy a new one.