Here's the deal. Blu-ray was rushed out the door in order to stay competitive with HD DVD. The Blu-ray Disc Association has only recently finalized the formats specifications, which most current players do not conform to. This includes the Playstation 3, and all of Sony's own Blu-ray players. The lacking features include PIP support, part of BD-Java technology. Many players that even support BD-Java, do not support picture in picture.
After October 31, 2007, picture-in-picture (via BD-J) will be mandatory for players to carry the Blu-ray logo. New specification requirements also include 256MB of persistent memory storage, and a required 1GB for players with an internet connection. This new memory requirement is also part of the BD-J picture-in-picture spec.
So what does this mean for your current Blu-ray player? A simple firmware update, right? Well, a firmware update obviously won't give you memory that isn't already there.
Given the nature of the PS3s hardware, it's reasonable to assume PIP will eventually be supported. Other players wont be so lucky.
Even if your Blu-ray player isn't up to spec, it is promised you will be able to watch all Blu-ray discs in the most basic form.
