The huge thing here for Sony is that it is trying to tie this all under the PSN Agreement. Heidari has demonstrated you don't have to agree to the PSN TOS to either download a copy of the firmware, or during the update.
Now you're saying you know there's an agreement at update time right? Correct, but it is a different agreement, which has no clause for Sony to be able to choose California as the forum, and also is by Sony Computer Entertainment America, who isn't a party to this suit!
This is all extremely good news for geohot. And be on the lookout for a new firmware from Sony which has the PSN TOS agreement.