I bought coded arms yesterday. It comes prepacked with the 1.50 update software, which it requires to run. If you do not have the firmware, you can pop the coded arms umd in. Under the game heading there are now 2 icons represented as UMD's. the first is the game launch icon. the second is the update launch icon. in order to install the update, you must click on the update program to tell it to update. If you have a 1.0 japanese model, there is a program on the site news page here that will bypass the update check in the game.
So it is still your 'choice' whether you update or not. You have to tell your PSP to do it.