The website of the USB jailbreak device in question (http://psjailbreak.com/) is currently down at time of writing but I have managed to grab the text of the website below:
PS Jailbreak is a USB plug and play solution that installs in seconds, keeping your valid warranty seal in tact.
Easy to use installer and GUI takes you step by step.
Compatible with all production models FAT and SLIM. Supports all regions: USA, JAP, PAL and KOREA
PS Jailbreak disables forced software updates and will never brick your console.
Supports all games (it does not allow backups of bluray movies , dvd movies , or past consoles games)
Backup games to your internal hard drive or external hard drive through USB, and boot directly off GUI. Eliminating the need for expensive blueray burners and costly blank media.
Play backups off your hard drives 2x as fast as off the blueray drive. This eliminates lags and glitches to provide you with smoother game play.
Open up your console to a new generation of homebrew applications. Load homebrew apps/games off any USB hard drive/flash drive.
Fully updatable with new features/updates by connecting PS Jailbreak to any computers USB port.
The USB device, which apparently sells for around £80 (US$120), is plugged in prior to booting. When the PS3 is switched on, the Eject button is also pressed in quick succession. LEDs light up on the USB device to indicate mode of operation.
Its basic premise is that you seem to be able to perform backups of games to an external HDD, and then be able to run them as if you had loaded the game CD/DVD/BluRay into the drive on the PS3. This sounds great in practice.
Although BluRay discs seem to be quite resistant to scratches, once a game disc fails to load - then you are stuffed. Time to go out to the shops and buy another. This device fits the bill for my requirements, although having said that, I can see other miscreants using it for copying say rented games.
I'm convinced that Sony will be trying their best over the next week or so to release a new firmware update to negate this device's effect on the operation of the PS3. If they are unable to do so, then I might be interested! It may possibly give me the option of being able to perhaps reinstall my Ubuntu Linux as another OS to use, which was the 'other os' option that Sony so kindly removed for me in a previous firmware update.
More info available here in the Register article:
PS3 jailbroken - The Register