Due to the increased sales and popularity of the larger 60GB version, Sony had since decided to cease production of the 20GB version of the PS3
In my opinion Sony had a utter brain fart when they decided to offer 2 versions of the PS3 that were so close in price. There was only a $100 price difference. It would have made more since if they price between the 60GB version and the 20GB version was like $200 or more.
The 20GB version will remain for sale until the current stock is gone. Sony will also continue to support the system with software updates.
The basis for this decision was made from the public picking the 60GB version 10 to 1 over the 20GB version.