Tallyho: My TV has L & R audio phono outputs from which I run QED cable into the L & R audio inputs of my stereo amp. This way I do indeed get sound coming out from my stereo speakers
However when I hook up the AV lead from the PS3 and connect the red and white ( not the yellow) leads into the L & R audio inputs of my amp....no sound comes out of the speakers which is strange to say the least
Ah, if you're taking the audio from your TV you must be sending the audio over HDMI to your TV.*edit* too slow, beaten to it
If you want to get sound from the AV lead, you have to go into: Settings> Sound settings> Audio output settings> Audio Input Connector/SCART/AV MULTI
You can't send audio over HDMI and the AV lead at the same time, as far as I know.
To the OP, there is another option for getting analogue audio from the PS3, and it's the little AV adaptor that you could buy for PS2.
http://www.amazon.co.uk/Official-Sony-PlayStation-AV-Adaptor/dp/B0000541B0 It works fine with PS3, and allows you to use better interconnects. Some people swear this gives better quality. I have one, and have tried it, but I don't think the resulting quality is any better, even with a set of Ecosse phono leads. To me, the adaptor itself must be damaging the signal. But it's worth a try!
Another point on sound quality is that I find the direct connection from the PS3 sounds better than using my TV's outputs. BUT... i have lip-sync problems if I do, so I usually just use the TV outputs.