If you have a PS3 Slim then this news doesn’t effect you. For all my Fat PS3 owners, the option of installing an OS on your PS3 such as Linux will no longer be available when firmware 3.21 is released on the 1st of April. Anyone who is currently using another OS besides the standard one will find it to be disabled as well.
The word going around is that Sony knows about the potential piracy exploits that could and have been taken advantage of through using another OS. Sony says the feature is being taking out because of “security concerns”. This is all fine and dandy, but even I know that the hackers can’t be stopped forever. It’s only a matter of time Sony. It’s only a matter of time (evil laugh). Here is what you will lose if you chose not to update your firmware.
* Ability to sign in to PlayStation Network and use network features that require signing in to PlayStation Network, such as online features of PS3 games and chat.
* Playback of PS3 software titles or Blu-ray Disc videos that require PS3 system software version 3.21 or later
* Playback of copyright-protected videos that are stored on a media server (when DTCP-IP is enabled under Settings)
* Use of new features and improvements that are available on PS3 system software 3.21 or later
source: playstation blog