I take issue with Sony removing Other OS out of principle. They should not be allowed to take out features that were part of the system when purchased, major or minor. It's just wrong; a bait and switch. But something else to consider is that in the EULA, the words "functionality" and "functioning" are both used in the software updates section only. No where are "features" referred to as "functions." In fact, the word "feature" is used to describe the things that the system may do (such as "Internet Features"), while the word "function" is used to describe how well the features work, as it says that software updates will ensure that the services are "functioning properly." Therefore, I take the use of "some loss of functionality" as meaning a software update may cause certain features to function at a loss, or slower/less efficiently. This may sound like splitting hairs, but so is using an EULA to justify the removal of features which were bought and paid for by thousands of people.
Something else I take issue with is how Sony claims that this software update is "optional." If that were true, then I would not have had to return Red Dead Redemption to amazon.com in exchange for the 360 version. An optional update would contain new features or fixes which you could opt out of without removing compatibility with future games which were written for the system. If Sony wants to play the "optional" game, every game they release should be mandated to disclaim which firmware revision it requires, and not be able to say that the games are simply PS3 compatible. I own two PS3s and neither of them are now compatible with Red Dead Redemption.
Something else I take issue with is how Sony claims that this software update is "optional." If that were true, then I would not have had to return Red Dead Redemption to amazon.com in exchange for the 360 version. An optional update would contain new features or fixes which you could opt out of without removing compatibility with future games which were written for the system. If Sony wants to play the "optional" game, every game they release should be mandated to disclaim which firmware revision it requires, and not be able to say that the games are simply PS3 compatible. I own two PS3s and neither of them are now compatible with Red Dead Redemption.