It's funny...it does and then again...it doesn't. If you are playing SingStar, it does. If you are playing Little Big Planet, it doesn't. I was excited when it worked in SingStar but now realize that I will have to shell out the $$ now. :(
I have the ps2 eyetoy (that came with the nike kinetic) and it does work with the ps3 on some games bigplanet, burnout, and also works as a mic (didn't realize it had one). Unfortunately it does not work with the psn downloadable games (there goes $10). I may by the new one for the auto focus and faster frame rate (probably why the older one isn't compatible). Hope that helps.