You should be able to play the latest final fantasy game, as there should be a PS2 memory card utlitiy on the PS3 to create virtual memory cards for PS2 games on the HDD.
Though, it's a little more complicated to get a PS2 controller like the guitar hooked to the PS3, but there could be an adapter.
Nyko, a 3rd party company, is making a guitar similar to the PS2's Guitar Hero guitar. You can also buy an adapter to connect your old PS2 controllers and guitar to the PS3. For memory cards, you can choose to save all your data on the hard drive of the system or if you want to use your PS2 memory cards, you may also buy an adapter for memory cards.
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