I was so close to installing the latest update, but somehow managed to spend 30 minutes online on my PC reading The Register - which revealed that the latest update removes the ability of your PS3 to run LINUX!
You appear to have a choice but no choice. Yesterday, I was able to play online games on the PSN and also boot my PS3 into Ubuntu. I've also played around with the Yellow Dog version but went back to Ubuntu in the end. Today, I can either accept the update and then not be able to use my Ubuntu. If I don't accept the update, then I can no longer play online games, and this accounts for around 80% of the games purchased.
It is simply outrageous that Sony have even thought about this, let alone actually implementing it. They are removing a feature that was advertised as being integral to the PS3 at launch. Where Sony stands from a legal viewpoint is far from certain. My analogy is that it's similar to a car manufacturer deciding to remove the stereo or sat/nav from your car, simply because they want to. You can then use the car as before (minus the stereo or sat/nav) OR sit there in your garage listening to your music whilst going nowhere.
Early adopters such as myself have invested big money in the platform and I simply don't understand Sony's logic. Like I said, they have 'given' me a choice when in fact there simply is no choice. I purchased the PS3 because it had the ability to run another operating system (OS), as well as play games obviously.
I am awaiting Sony's response on the matter.