The Playstation 3 is a very good Blu-Ray DVD player and isn't a "low end" model in any way. Sony is known for hardly never making entry level products, they only make the top tier products.
Also, the PS3's Blu-Ray capabilities can be upgraded via Software updates and add's new features to the PS3's Blu-Ray features. As a matter of fact, the last update in December 2007 included a Blu-Ray update for the Playstation 3.
However, stand alone Blu-Ray DVD players can't be upgraded via Software updates.