Sony is simply not having a good time lately. The company is fighting hackers by obtaining restraining orders, it's trying to get tools to hack the PlayStation 3 taken offline, and the latest PS3 firmware has quite a glitch: it makes hard drive upgrades impossible on many PS3 models.

The problem seems due to the rushed nature of Sony's latest security update. A post on NeoGaf explains the situation:

The 3.56 patch is a tiny patch which simply add/changes files in the 3.55 software. This differs from most patches which download the entire firmware. Since part of the software on models with 16MB of flash memory is stored on the hard drive, those PS3's need to reinstall the software when upgrading the drive. PS3's with 256MB of flash memory store all the software in the flash memory so it isn't lost on a drive upgrade. Anyway since 3.56 is a hot patch and requires 3.55 to be installed prior to updating, you can't install 3.56 on a new drive. You also could install 3.55 when upgrading if not for Sony's software version checks.

Don't worry, Sony isn't removing the ability to upgrade your hard drive. This issue popped up in a previous firmware update and was fixed, which means we can expect more patches in the near future. One poor gamer ran into this glitch the hard way when he tried to format his hardware and start with a fresh PlayStation 3... only to find his system more or less broken without a way to install a working hard drive.

If you're not planning to upgrade your hard drive, this isn't much of a problem, and it should be fixed soon. If you were planning to upgrade, just sit tight until Sony fixes the issue. The worst thing you could do at this point is reformat your hard drive, as there is no way to successfully restore it if you're running the latest firmware.

Update: It looks as if Sony silently pushed out a new version of the 3.56 firmware that requires you to manually update the system. There are no notes on what this new version does, and the version number remains the same, but the problem may have been fixed.