It will read dvd movies, blu-ray movies, but not ps3 games. Literally nothing comes up under the game tab. You put in the disc, and that's it, no disc or title under the games tab. Sony repair time? =/
If you're in a household with pets, kids or smokers, I'd suggest cleaning the PS3 lens manually before buying a replacement. A friend on here had a 60gb PS3 that would sporadically read PS3 game discs and after cleaning the entire laser(including the mirrors inside it) it was reading like new again.
In other words, same issue that caused the PS2 Disc Read Error has struck the PS3. Clean the lens and you should get it to read discs again.