The Emotion Engine (EE) is the PlayStation 2 CPU, and the Graphics Synthesizer (GS) is the PS2 graphics chip. Both were included in early PS3 models to achieve backwards compatibility. In later models (CECHC/CECHD/CECHE/CECHF), the EE chip was removed and the PS3 now uses software to achieve backwards compatibility. Naturally, the physical hardware has better backwards compatibility, however, Sony regularly updates the PS2 emulator software via firmware updates.
In the current models (CECHG/CECHH), the GS chip has been removed and so there is no backwards compatibility, since the job of the GS cannot be simulated using software. Eventually, Sony may figure a way out to simulate the GS to bring PS2 compatibility to the current models.