I do hear a lot of reports about linux on ps3 being really slow because it runs in an emulated environment that also restricts access to the GPU (essentially completely right?)
Access to the RSX is restricted by hypervisor, the firmware restricts access to some gpu functions. basically, sony expect you to use linux for work and it's own os for console games. They don't want non- sony games to play on it. IIRC: you still cannot play bluray either.
Yellowdog is supposed to be OK to use as a network appliance.
Low speed reports of linux on PS3 and others is usually from gamers who are attempting to run games under linux. These will be slow due to gpu access restrictions.
Consoles usually expect software to live mainly on optical media, so HDD space and RAM tend to be limiting factors.
The main reason for running linux on a ps3 is, as you have noticed, to get basic computing resources at low cost where your main interest is gaming. You may aso want to experiment with cell broadband. Otherwise you are probably better off with a netbook.