I concur with Lyndon.

Officially the 20GB version is a cutdown version of the 60GB in the sense that it doesn't have the different media card slots (e.g. Compact Flash II, SD etc...) I believe it also doesn't have Wi-Fi on the 20GB so you wouldn't be able to use your PSP as a controller and you won't be able to connect to internet via Wireless either.
Er there are a few other differences but I can't think of them right now.

Basically the 20GB is games machine with Blu-Ray player combined, whereas the 60GB version is, apparently being touted as, a PC/Entertainment system that's not JUST for games players.

I hope that helps...