Looking at the comparative PS3 VS PC screens, you can see that the environment in the PS3 version is rendered at a significantly lower resolution and up-scaled. It looks like the texture resolution is lower as well. But the dynamic shadows are there and look quite good.

It's a definite downgrade - but I find it acceptable if it runs smoothly and can handle the same volume of characters as the PC version - which I suspect is why the resolution was sacrificed to begin with.

Also, strangely enough, sometimes games look better at a lower resolution... FF7, 8, & 9 certainly do.