These are demos by a new company called Ageia. Ageia is on the verge of selling a Physics Processing Unit which brings about more realistic physics rendering in games. Here are a couple of demos....

http://www.gdhardware.com/files/ageia/BuildingDestruction/side_by_side.wmv

http://www.gdhardware.com/files/ageia/Airtight/DivxPhysxAirtight720x400.avi

Some motherboard manufacturers have already contracted with this company to include PPU units on their motherboards.

Sony should contract this company for the final release of PS3 (remember, the version at E3 is a prototype, there can be improvements.)

for example, if you play Jak 3's palace destruction scene with this technology, the destruction would be so realistic, you would actually think that the 2 km high structure is really crashing down on you! (can someone test this out? if they can?)

oops! spoke too soon again! I saw the E3 press confrence and the cell processor can definitly handle that.

p.s: I have a very good suggestion on the redesigned controller: don't resdesign the controller, just intergrate the bluetooth right into the design of the old controller and add a removable lithium ion battery (it has to correspond with the console color as well)! The new controller's like the XBOX big and clumsy controller! (very uncomfortable!) and what's with the spider man text of "Playstation 3" on the top?!? just use the stylised version of the text PS3 (similar to PS2 logo) and put the spider man text "Playstation 3" smaller and at the bottom of the PS3 logo!

Example:

stylised and in big text:
PS3
under it in spider man text:
Playstation 3

it looks way better that way! It would increase sales! No one would like to buy a console with a big, clumsy controller or a text design that sucks!
Remember, it's a prototype, and there is room for improvement and this is one of them.

Jak X has some of the best physics in any console game yet! It's all about J&D in "Crash City", a place where there is absolutly no police and street racing is legal! a bit like Surrey, BC unpoliced and an island. In my opinion, this is not a sequel! More of a between adventure between Jak 3 and Jak 4. (I think there will be a 4?)

check this out http://meqon.com