The PPU is different from but complementary to the CPU/GPU as follows: It is dependent on the nature of application for which the processor has been optimized. For instance, a GPU have been designed efficiently to do 3D transform in a highly parallelized pipelined fashion to speed lighting effects, object transforms and rendering output to the users Monitor, So GPU — How things Look. The CPU on the other hand is a general purpose device designed to support a wide profile of application and most efficiently supply performance to a wide spectrum of application but not optimized to run a particular application at it most optimal performance.
Ageia PhysX Chip – Interview
Duane from Gamers Depot let me know that he has posted an interview with the CEO and COO of Ageia, the compnay responsible for all the hype around physics processing units.