From Wikipedia:

In September 2004, Sony unveiled its third major hardware revision (V12, model number SCPH-70000). Available in late October 2004, it is smaller, thinner, and quieter than the older versions and includes a built-in Ethernet port (in some markets it also has an integrated modem). Due to its thinner profile, it does not contain the 3.5" expansion bay and therefore does not support the internal hard disk drive. It also lacks an internal power supply, similar to the GameCube, and has a modified Multitap expansion. The removal of the expansion bay has been criticized as a limitation due to the existence of titles such as Final Fantasy XI, which require the use of the HDD. The official PS2 Linux also requires an expansion bay to function. Currently only the modified Multitap is sold in stores, however these are also compatible with the older versions, and also added support for multiple memory cards on some games. Third-party connectors can be soldered into the unit giving hard drive support, however IDE connections were completely removed in the V14 revision, thereby eliminating this option. Certain mod chips enable the use of a USB hard drive or other mass storage device.