That indicates a massive failure of Sony's part. I've been a part of massive rollouts, and the one thing you do is test the crap out of upgrade paths on different hardware. I've never rolled out firmware, but even for plain old software, at least when I was working with mobile devices, we had tons of people and extensive test plans dedicated to upgrade/downgrade scenarios.

If this was one freakish incident, it would be chaulked up to issues with a particular hardware defect or something, but the quantity of reports seem to indicate a fairly widespread problem.

I'd expect to see a ton of free monthly fees or game coupons sprinkled about by Sony as damage control, or using the PSN gamer activity records to issue... I don't know what, since you can't really get game states back precisely. If they don't do at least that, I would expect pissed off customers that leave the Sony fold for at least a year or two.

However, I've historically been terrible at guessing how companies will react to situations like this. :)

I sense you are both a fan of the word "massive", you massive nerds.