No, Sony said that you can continue to use Linux, but if you do, you can't use the PlayStation Network

It is very simple, and this is why Sony make consumers agree to things, so that they can keep control of the system

What do you mean, "good?" It was immoral, in the legal opinion of the judge it was immoral, he simply didn't find it legally actionable due to the plaintiff's failure of articulation

Sony shouldn't abuse their position as sole content provider to simply force people to give up functionality in one area to gain functionality in another, if the earlier functionality was something they paid for as part of the purchase of the initial device itself and not related to the network service, which is discrete from the purchased device. Despite the legal fantasies and fairy-stories Sony attempts to weave, claiming that they own your copy of the operating firmware on the device and have the right to alter it at will is just that: fairy stories and contrived bullshit in an attempt to circumcede established consumer law

Why do you think they bullied geohotz into submission, and screamed like mad to try and twist that case to their favor at every step? This disputes the same underlying principle, whereby they know that if they were actually brought to trial on any of this, they would get their asses handed to them so hard that Stringer wouldn't be able to sit down for a year.

"claiming that they own your copy of the operating firmware on the device and have the right to alter it at will is just that"

actually thats not really accurate it was never stated that they have the right to modify your software ( the user does that voluntarily ), in fact i would say that indeed the user has control over the current version of software on the system

...but the fact still remains that for continued access to their network you have to download their software updates 

Right, but this attitude is monopolistic and likely in a grey area regarding consumer law (at best), because they sell you a product, not the service, and they shouldn't have the legal right to alter the product you purchased or else they suspend your access to the service. They are discrete realms. Would you be claiming this if Windows/Apple said "upgrade your software so that we can uninstall part of your software or we'll disable your network card?"

The idea is effectively the same. The terms of your access to the service should not be used as leverage for them to remove value from your purchased product. The similarity on the case against Hotz is that Sony asserted that they have control over the current version of software as well (e.g. that it is actionable for users to alter their current software, or distribute information to that effect), which definitely is not the case. They have egregiously overextended the notion of where the service ends and the consumer's property begins, and one day they will be taken to task for it with great prejudice.

really and truly i place most of the blame on geohot, had he not distributed  means to break through the security sony wouldn't have removed other os ( there would have been no reason to )

You mean the security on a device that he paid for? That bastard! How dare he attempt to modify something that's his!

People here have to realise that this was Sony's attempt to regulate user purchased hardware in order to save money on server-side security. After this debacle, as well as the hacking attempts on a lax security PSN, it has come back to bite them on the ass.

Now, if Sony was handing out PS3s for free, then you wouldn't hear me complaining. Sony could do what they want with hardware that's still theirs, but this is hardware purchased by a customer. Are you really going to stand there and say that Sony have a right to do this?