That is a lie made up by Xbox fangirls. It works fine. It plays Blu-ray movies at full 1080p through HDMI. Unlike the 360, where only certain models have a HDMI output.
I doubt you have heard rumors about the PS3 slim Blu-ray player having limited functionality (read maybe, not heard), because it isn't true.
Just like the PS3 fat Blu-ray player, and any Blu-ray player, the PS3 slim Blu-ray player can be updated with software updates. This means that Sony can put whatever functionality they want on the Blu-ray player. Since the PS3 fat and PS3 slim use the EXACT same firmware, they will both have the EXACT same functionality, no matter what anyone says.
In order for the PS3 slim to have less functionality, it would have to use its own firmware, and it doesn't. The PS3 Blu-ray (fat or slim) is one of a few Blu-ray players that have every functionality available. And since both PS3s use the exact same firmware, they both get any and all updates before stand alone Blu-ray players.
As far as it not working, it would be a software issue, not a hardware issue. All that would have to happen is to download the current firmware and the system would be up to date. If that didn't work, then Sony would replace the system since it is still in the 1 year warranty period.
the model just came out so how can anyone say whether theres a defect in it or not? if anything, its more efficient. theyve redesigned the cooling system, its lighter and less noisy (not that it was noisy to begin with), has bravia sync, and the only downside is that you cant install os like linux. aside from that, there shouldnt be any issues with it