The firmware update primarily focuses on improving the PlayStation 3’s media capabilities. First you have the support for DivX video playback (home movies not pirated movies...).
Then comes the main feature of the upgrade which is a new photo gallery application (100MB download) which simplifies the organization process and makes viewing them alot easier.
A small feature is that now you have guest access to the PlayStation Store to browse all the stuff you can't buy (because your not officially a member).