CPU - Think & Orchestrate
GPU - Display & Render
PPU - Motion & Interaction
These are the three components of a next generation gaming systems, that will allow game developers to use better technology in their software. Notice how I said, "Systems". That's because next generation consoles like PS3 & XBOX360 will be using all three of those components.
The theory behind the PPU is that it will allow game developers to increase the physics capabilities with-in a game 1000 times for what they currently are. Games like Unreal 2007 as mentioned above, will be one of the first games that is currently being designed with the "Ageia Physx SDK." The integration between UNREAL ENGINE 3 & Physx SDK will be critical to game developers.
Allowing them to create more realistic "real world" physics within the engine. Then with the PPU, the end user can utilize the full potential of these tools that they have employeed.
Some recent demos show just a small amount of what is to come in the world of in-game physics. Check them out.