I've got to wonder why there's so much hate towards Sony. They're not evil, they're just trying to protect their already struggling revenue stream...
Bottom line is, unless they resolve this issue, they won't be able to afford to make the next PSwhatever. They've made a loss on every PS3 sold until recently, maybe they still do, and they rely on hefty licensing on every disc sold for their revenue. They probably just about break even when somebody buys about 10 games (actually, I read it was an attach rate of about 7 to break even, but it's not the actual number that's significant, but the fact it happens at all).
It's not just about piracy. If anybody can sign anything, that's their business model gone completely. Look at how Activision got started originally - it successfully argued in court that if they could figure out how to make games for the Atari, it was legal for them to sell them. If a similar verdict was reached today, Sony would simply never be able to turn a profit on their entertainment division.
The encryption keys really are Sony's biggest asset in their entertainment division, and it's crazy to think that they're going to just sit idly by watching people destroy their empire.