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Is it dusty?  Yes.  Is it a hazard to health?  Definately not.  Sony should have just repaired the console.  They are trying to save face by releasing these pictures (which we have no way of knowing if it's the unit in question, or how bad it is because in the right lighting I think a few of you would be surprised how dusty things are around your house).  And with the time their legal counsel, management, and service center have spent on this situation they probably have multiplied $150 several times.  And even if you agree with the decision, no one says "Sony is a an awesome company that adheres strictly to warranties.  I want to support them by buying a PS3!"  So there are no positives for this situation.  Yet another management decision that shows why they have gone from first to last.