As far as I know, it's hardware-based. At least, that's what I got from it. I have personally not seen any updates regarding audio CD support. Though it may be possible they can do it via firmware, so I could be wrong on that note. I just know it's been stated they will add MP3 and video support. So we'll see what happens in the future.
Guys this is the saddest update EVER they took away the pre order glitch and its WAY harder to JailBreak DO NOT UPDATE if you take my advice
I am getting the error code 8002F1f9 from usb key in recovery mode and from the system install help. Gets stuck in a update boot loop.