This means that USB exploiters like PSFreedom, PSGroove and PSJailbreak are defunct, or at least for now. This firmware is mandatory for PSN.
That means there's no access to the PlayStation Network for goodies or multiplayer unless you install this anti-homebrew/piracy firmware update from Sony.
"A minor update to your PS3 system is now available via system software update v3.42 that includes additional security features," Sony's hardware man John Koller. The pirates/homebrew brigade will likely respond soon enough.
The PlayStation 3 firmware-exploit wars have begun.