This is one of two UK models of Sony's third major version of its PS3 console. The main differences between the two models are the size of storage included (the majority of this review discusses that difference) and the price - this model's a lot cheaper, the cheapest PS3 yet.
What the two models have in common is that they are both significantly smaller and lighter than Sony's previous PS3 versions. They also have a top loading disc drive rather than a slot loading one (a button releases a catch so the cover of the drive slides aside, then you push it back in place after inserting the disc). Aside from that there are few major differences from the last generation - same number of USB ports (2), same outputs, no SACD or PS2 disc compatibility, etc . The reduction in size and weight is very welcome and although some may feel slot loading is cooler and marginally more convenient, it's not a big deal, and you can understand that by doing this they have been able to make the unit cheaper.
To deal with the differences, this model has a stated storage size of 12Gb, made up of flash memory. The other model has a stated storage size of 500Gb, this being hard drive storage. When I got my 12Gb PS3 I immediately downloaded the latest version of the system software, and after that I checked the storage size available according to the system. It said I had 9108MB left. (Why not 12Gb? Well the system software takes up some space)
So is it worth going for this model at a cheaper price? That will depend on how you want to use the PS3, and you should give it some careful thought before buying.
If you want to use your PS3 to store more than a very small amount of audio or video, this is definitely not a good choice for you. The storage space is too small for that. For watching blu ray discs though, it's fine, even good (in fact, even though it's more expensive than entry level blu ray players, it must be worth £100 or so alone as a player considering that it has a built-in wireless receiver, no dongle required, and that Sony is so quick with updates so all the latest discs play just right). You can also easily connect an external hard drive or usb stick to play music or videos (or to take backups - more on that later).
Games is where it gets tricky. Considering disc-based games first, most PS3 games have only small compulsory install or patch sizes (some have none at all) and fairly small save sizes. These don't present a problem. However a significant minority of games do have fairly large mandatory installs and some of these can be very large. It appears the game 'Rage' has the largest compulsory install for a disc-based game yet released, at 8Gb. So in short yes you can play any currently released disc-based game on this model, and now this model is released, especially as it's fairly late in the PS3's life cycle, it seems unlikely that Sony would allow a disc-based game to require an install greater than this 12Gb model could handle. (in fact you might wonder if this 12Gb size has been chosen to be as small as possible but so 'any game' plays...). Even so you can see how if you had Rage installed there wouldn't be room for much else. That's an extreme case but it's not uncommon for games to have install sizes of a few Gb. If you're the kind of person who wants to keep many games on the go, or who just wants to forget about install issues, then this isn't for you. If you are content to have a couple games on the go (plus an indefinite number of those with very small install and save sizes, of which there are many) then this is a good choice.
Some games can't be purchased on disc and must be purchased on the Playstation Network (PSN), these tend to be smaller games or revamped classics. They tend to have smaller sizes so with some careful memory management the issue is really the same as the one above for disc game installs (install sizes are fairly typical of the sizes of games that aren't available at all on disc). So again if you want to keep many of these permanently on your PS3 this isn't for you. You can also download any purchased game from the Playstation Network up to 5 times, and you can backup PSN games to a USB storage device by taking a backup of all your data (you can also backup MOST saves individually, as long as the game doesn't 'copy protect' them). The same data storage issues apply to downloadable game demos you can get from PSN, which tend to be around similar sizes - although with these you'll likely to be happy to get rid of them after you've played. And again, there is downloadable content for some games which will also take up more space.
A minor point is the fact that this model has flash memory storage whereas the 500Gb model has hard drive storage. Flash memory is often said to be faster than hard drives, lighter, quieter and more reliable. Well the memory on this PS3 doesn't seem to be working faster - the Metal Gear Solid 4 regular (not full) install took about 8-9 minutes for me, the same as it does with a PS3 with a hard drive. Other installs don't feel faster either (maybe even slightly slower, but not significantly so). It is lighter but that doesn't make a huge difference to the weight. It is quieter but the hard drive on the PS3 isn't too noisy anyway. As for reliable, we'll have to see, but it seems PS3 hard drives are fairly reliable anyway. At least you can perhaps feel a bit cooler or more modern knowing you have flash memory under the hood, for people who care about that kind of thing!
Having said all that about storage space, it should be noted that you can install a hard drive in it (and it doesn't have to be a proprietary hard drive), similar to how the hard drives in all PS3s can be switched / upgraded. In fact some have noted that with the price of this model and the price of hard drives, it could save you money to buy this model and a 500Gb hard drive, over buying the 500Gb model. Or you could add a larger hard drive, e.g. 1Tb. However you not only need a hard drive but also a caddy (or 'mounting bracket' as Sony call it) that will fit. Search for "Sony PlayStation 3 Replacement Hard Disk Drive (HDD) Mounting Bracket" on Amazon now and you will find the caddy listed. Sony are also releasing an official hard drive for this model with the caddy included, search "Sony PlayStation 3 250GB Hard Disk Drive (HDD) (Includes Mounting Bracket) (PS3)" for that product on Amazon. You can install other hard drives though - make sure you pick one that with 2.5" width, 9.5mm height, 5400rpm speed and with SATA interface, to make sure it's compatible.
The PS3 has a great library of games now with many more greats to come even though the PS4 is said to be just around the corner. It's also a very good blu ray player. I'm someone who is fine having just a few games on the go at a time and I knew I could handle the memory management issues that would come with this model. I prefer to buy games and movies on disc. I have a PC and an external hard drive for audio and video. So this model was just right for me and I was able to take advantage of the significantly lower price point.