IMHO, I think that Emulators are illegal to create. And unsupport to use.
IE. If you create and distribute a Sony PlayStation Emulator, then don't be surpised if Sony desides to take you court, or at least give you a letter of warning saying "Cease and Desist". However if you use a Sony PlayStation, and you have problems playing a game, then you are one your own as the product is not supported.
Now common sence would say "Why would sony even care?" After all, Sony now sells the console at a loss (or at cost) in order to make money on the games. But we are talking about Sony's Lawers here... who have too much money and too much time.
I do remember many years ago that Sony was shutting down websites with PSX and PS2 emulators. I am not sure what there position on that is now days considering that the PS2 colsoles are that cheap. Personally I think that they should not even care as they make the more just on the games as appose to the consoles.
HOWEVER....... I have heard that there is a PS2 Emulator that works on X-Box. This is a 3rd party software, and I can imagine that Sony's Lawers would love to get their hands on the individual that coded that one up.
Emulators are like your Boot Leg DVD Movies. Nothing stopping you from using them in the comfort of your own home, but they are illegal distribute.
I do not for a fact that ROM Emulators are illegal to use a commericial enviroment. A client of mine set up an LAN Cafe. The computer had a massive collection of Arcade Game ROMs.
Big No-No!
One of the Arcade Games Distributors took him down.
Are emulators legal? 
Linear Mode
