According to Arstechnica’s ever-reliable “mole,” Sony is indeed phasing out the 80GB PlayStation 3 model — but is sticking to their two-model approach with a new model that is said to include additional hard drive space, as well as the upcoming Dual Shock 3 controller, which is scheduled for a Spring 2008 release.

Reportedly, the upgraded model will still retail at the price point of $499, which makes sense, because recently Sony has cut costs on PS3 production. No word on if the rumored model will include backwards compatibility with PS2 games.

Mole: 80GB PS3 dead, 120-160GB with Dual Shock 3 incoming [Arstechnica]

Read more: GameStop Adds Fuel To Recent PS3 Rumors, PS3 80GB Dropping To $400 In September, Will Replace 40GB, Rumor: PS3, 360 Price Cut Coming This Fall, Sony To Drop PS3 Price, Announce 40GB In Europe Tomorrow, Pachter: $499 PS3 Not Going Anywhere