It is not a rumor - but has been in the specifications since day one!
The PS3 will be the first piece of consumer electronics with HDMI 1.3 specifications and will be the first game system with a built in HD disc format as standard equipment. It should be able to pass HD sound formats over the HDMI cable to HDMI 1.3 equipped receivers (there are none right now). It likely won't have analog multi-channel outputs and won't be able to decode those audio formats internally, but you may get some versions over the optical audio connection as well.
It's a great post above from Nomo - and it is a no brainer for certain people. But, the actual quality of Blu-ray Disc (not DVD) playback from the PS3 has yet to be seen and reviewed. If it holds its own as a good Blu-ray player, then that should really bolster sales by those who want both the gaming and HD aspects of the system but can't stomach the thought of a $1,000 HD disc player.
In the next year, I really expect that Blu-ray players will begin to see models at the $500.00 and under price point start to emerge to compete directly with HD-DVD on pricing, though that still puts it at the same price point for a PS3 base model.
For those who haven't heard: The PS3 base model will now also include HDMI 1.3 output. This changes things for me because I felt obligated to get the nicer model so I could have the HDMI connector. Now, I don't need to.