From the horses mouth:
Sony Computer Entertainment Europe (SCEE) can categorically deny that there is a 40% failure rate on the newly release 40GB PLAYSTATION®3 (PS3) as has been reported on a Dutch website. Having launched in October, the 40GB PS3 has encountered the same industry leading, very low failure rates, comparable to the low level failure rates of the 60GB PS3.
“We are very proud of the quality and reliability of PLAYSTATION 3 and are disappointed that such extremely sloppy journalism has resulted in this totally inaccurate story,” said David Reeves, President, Sony Computer Entertainment Europe. “Since launching the 40GB PS3, we have experienced a fantastic jump in sales and the failure rates have remained at the very low level that we not only strive for, but have been achieving since the launch of PS3.”