Sony released the Sony PSP firmware 3.10.
The 3.10 firmware includes expanded support for PLAYSTATION®Network titles, MPEG-4 AVC format video support for LocationFree player, conserve Memory option in PSP browser and Dynamic normalizer sound setting.
There apparently security improvements in this update as well, making the homebrew community not happy as there is no downgrader yet from 3.10. For firmware 3.03 you can downgrade to the homebrew friendly 1.5 or a special 3.03. If you are into this here is a recent overview of upgrade-downgrade PSP packages.
More details and firmware download are available on this page. Sony motivates you to upgrade with some new downloadable game demos like Killzone: Liberation, that require 3.10.
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