The PlayStation 3 firmware has updated to 1.7, which purportedly allows you to play your downloaded PS One titles on the console itself. Here's what else got updated:
Your PSOne and PS2 controllers and accessories will now rumble.
You can now use PSOne save files from your PSP on the PS3.
The PSP firmware also received an upgrade to 3.4. Unfortunately, we are having serious issues with playing PS One games that are already saved on our PSP -- namely, it's not working at all-- but the console is properly detecting our PSP save files. Our fanboybrethren are also experiencing similar issues. Will the PS Store update and offer users compatible files?
[Update: Sony has acknowledged the issue; it will be fixed in May.]