That being said, the decision to remove OtherOS was hardly arbitrary - it originated from Geohot's actions, which catapulted Sony into (an unfortunately rash) action.
As I understand it, OtherOS had already been disabled in slim PS3s (though the firmware still contained the code), and that's what Geohot was attempting to reenable. Sony's reaction was to remove OtherOS from existing fat PS3s. I may be remembering it wrong, though.
In other words, Sony decided to remove OtherOS from slim PS3 models (that is, they shipped without the option), despite the fact that the hardware can handle it without issues, a decision which certainly appears arbitrary. It looks to me like they no longer wanted to sell consoles with OtherOS enabled, and they took the first opportunity they could to disable it in the older PS3s as well (perhaps so they wouldn't have to maintain multiple sets of firmware). I would suggest that Geohot's difficult-to-execute hack was simply a convenient scapegoat for a decision Sony had already wanted to make (for whatever reason).
That's all speculation, of course.
However, Geohot releasing the root key to the ENTIRE WORLD does NOT constitute just "trying to get the functionality back".
All *fail0verflow* did was try to get the functionality back, and Sony named them in the motion as well, so we're sort of stuck defending both them and Geohot since Sony named them together. (I do agree that the relative size of each party has nothing to do with who is right and who is wrong.)
Whether or not Geohot was wrong to publish the key, one thing is certain: the bulk of Sony's claims in the motion are ridiculous, and that reflects poorly on them.