Interesting point regarding the Flashing of the firmware via automatic updates Moog.
There has been reports of people updating the firmware of the US machines and it going completely tits up.
Apparently the PSP *must* be plugged into the mains power before commencing with flashing. Im certainly by no means an expert, but wonder why this is required, is there such a power drain on the system, or is it a firewall in case someone attempts to do it with minimal battery charge, and subsequently turn the PSP into a fancy paperweight.
I dont know how SONY will handle the upgrades, you are correct in saying that owners will have no choice, unless they have a spare PSP soley for the purpose of runnning homebrew.
Perhaps it will be part of the initial run process of playing the latest games that you will have to either say 'Yes' to install the update at which stage the game can then be played.
Who knows - time will tell.