This is how the newest firmware update is described on the official PlayStation blog: "The next system software update for the PlayStation 3 (PS3) system will be released on April 1, 2010 (JST), and will disable the 'Install Other OS' feature that was available on the PS3 systems prior to the current slimmer models, launched in September 2009," a Sony rep wrote. "This feature enabled users to install an operating system, but due to security concerns, Sony Computer Entertainment will remove the functionality through the 3.21 system software update.
"In addition, disabling the 'Other OS' feature will help ensure that PS3 owners will continue to have access to the broad range of gaming and entertainment content from SCE and its content partners on a more secure system."
It's pointed out that this update is strictly voluntary, although if you don't download the new firmware you won't be able to connect to the PlayStation Network, play any games online, play any games or Blu-ray movies that "require" the new firmware, play any files kept on a media server, or download any future updates. To put it simply, if you don't grab the update, the system will become useless to you as a gaming or media machine.
Now, I never used the feature. But I don't like them removing it. Next thing I know, they'll be removing support for the backwards compatibility that's built into my system because it's not there in the newer units and perhaps there's some "security" reason.
Update: When first reading this, I didn't realize that the release date was April 1st. It is possible that this is a rather early april fool's joke. We'll see. It is possible that Sony has a sense of humor.