The original hackers who cracked the Playstation 3 focussed entirely on homebrew applications and games. They did not put in any code or mechanisms to allow pirated games to run, or to allow cheating. Of course, with freedom comes abuse, and other hackers have added the ability to cheat and run pirated games.
This is bad. Very bad. Unlike what some might think, I don't actually approve of piracy, and most certainly not of software. I consider the act of pirating music, film and TV an interim solution until the widely ignored, destructive, and wholly out-of-date copyright laws are amended to reflect the modern age. Of course, for many of us Europeans, downloading music, films, and TV is perfectly legal.
While cheating in a game is also perfectly fine by me, it's not fine if this happens on public servers. If you want to hook up a bunch of Playstations together, then cheat all you want. However, the majority doesn't want to cheat, and as such, Sony is well within its rights to kick hacked Playstation 3s of the Playstation Network - and that's exactly what their statement, uh, states.
"Consumers using circumvention devices or running unauthorized or pirated software will have access to the PlayStation Network and access to Qriocity services through PlayStation 3 system terminated permanently," Sony states, "To avoid this, consumers must immediately cease use and remove all circumvention devices and delete all unauthorized or pirated software from their PlayStation 3 systems."
Of course, Sony is a massive hypocrite here, since apparantly it's okay sto steal from consumers (OtherOS) but not the other way around. Well, at least this policy is good for the overwhelming majority of PS3 owners who couldn't give a creeper's bum about al this stuff.