There is some inkling of truth to this (the PS2 being used for military use, not Saddam buying them). At launch the Emotion Engine, largely thanks to the VPUs, could achieve a higher theoretical output than the most expensive PC CPUs of the time IF you could parallelize the arithmetic*. They're very well suited to calculate stuff like trajectories.

Anecdotally, Kazuhiko Aoki (the legendary game dev of Chrono Trigger / Final Fantasy fame, not the policitian), said that during the development of Final Fantasy IX, they had to check if the game worked on PS2's backwards compatibility, and they had problems sending a devkit from Japan to Hawaii

*Total of 6.2 GFlops when you combine all three, which is higher than the Pentium 4 Willamette and Athlon Thunderbird.