They were protecting their proprietary control system. I don't necessarily beliebe that wiping a PS3 and installing over it is an issue like they did but in a world where consoles are sold at a small loss (realistic losses at launch are $50-100) and is recouped through sold games pirated property is an issue. This whole debate feels so much like the pot one. People claim this high-minded appeal when in reality it's just a play to get high or in this case to pirate games.
If you want near absolute control buy a PC. Consoles are closed for a reason and this marginal community is no threat to them.
That being said, I'm ready for the PS4. The small screen in the controllers should be interesting and just about big enough to use for menu and item swapping. It could pan out well for RPGs or Madden with play selection on the controller.