I was directed to a posting about the lawsuit between Geohot and Sony by a twitter from @adafruit.
I think the article's title is rather misleading. Sony didn't drop the lawsuit: the lawsuit was settled. While Geohot admitted to no wrongdoing, he agreed to a permanent injunction barring him from distributing the information and code that he developed for the PS3. I don't actually view this as a victory for hackers: Sony knew full well that once this information was published, the cat was already out of the bag. They also likely knew that any monetary damages they could have conceivably extracted wouldn't pay for the costs of actually fighting the case. The only thing that they could really hope for was to use the threat of legal action so silence Geohot and any other PS3 hackers from further dissemination of their works.
Which is precisely what they did, and precisely what they got. The message from Sony wasn't that "if you hack our system and publish the results, we realize that's within your rights as an owner of Sony equipment", it was "you can expect us to have our lawyers call you, and threaten you with a lawsuit that could cost you your life's savings unless you capitulate."
I don't view this as a huge victory for owners of Sony products.