If a ps2 is in the store when you bring in yours to be replaced by a ps3, best buy will tell you your warranty is for "replacement" first. Which they will do, no problem. If you say you want the credit for the PS3 they will laugh at you b/c the warranty explicitly states you will get a replacement, or if thats not possible, credit tward the next model up.
This is a buyer beware. but it obviuosly can work, there are just a lot of variables.
And to the post about CC and tvs. i bought my HDTV there but I didnt buy the warranty, but then a year later when my manufacturer's warranty was expiring, circuit city sent me a form to buy their warranty which said i could get a new model if mine ever broke.
The kick there is, with TVs, new models are coming out all the time, so there is a better possibility to get a new one. With the PS3, Sony is going to milk the PS2 for all its worth, which means they will probably keep selling the psTWO for a while and so no ps3 for you, just a new mini-ps2