Our sources inside Sony indicate that, starting sometime this summer, new PSP games won't run unless you have the latest system firmware installed. Furthermore, new games will include a firmware update program that will run the first time you pop in the disc, which will offer to upgrade the software for you. If a firmware upgrade is needed, the game will tell you to plug the PSP into a wall socket and proceed to upgrade the system automatically.
Currently, the only way to upgrade PSP firmware is to select "Network Update" from the system menu and download the upgrade from the Internet using a WiFi connection.
Most North American model PSPs have firmware revision v1.5. A version 1.51 upgrade is already available for download via the "Network Update" menu.
Sony says that the upgrade fixes a few security problems and adds music functionality to the video menu.
Of course, many people in the PSP community suspect that these upgrades are merely just meant to fix bugs in the firmware that allow "exploits" to be run that let people run homebrew software and emulators on their PSPs. Recently, an exploit was released that allows owners of 1.5 model PSPs to run a variety of emulator programs (for Super Nintendo, Genesis, Game Boy, and so on). Obviously, Sony does not approve of the use of illegal ROM files with these programs.
Regardless of the reasoning behind it, it looks like new games will eventually start forcing firmware updates. So, all you pirates out there may have to buy a 2nd unit if you intend to continue taking advantage of the homebrew scene.
We've been assured that the two games shipping next week, Dead To Rights and Midnight Club 3, do not contain firmware updates.