Sony issued a firmware update to disable the ability to install a different OS, and that led to a class-action suit against them. In the meantime, George Hotz wrote a hack to restore the OtherOS feature, and Sony is now trying to nail him with DMCA and other copyright violations.
Somewhat complicating the legal situation are Sony's attempts to bring piracy in to the equation: they've argued that removing the ability to run Linux was necessary to prevent piracy, and that Hotz's hack facilitates piracy. Neither claim withstands much scrutiny, as piracy did not become feasible until a Sony employee tweeted their root key, well after they removed the OtherOS feature, and not too long after Sony told the court that Hotz's hack had caused irreparable harm, Sony patched the hole Hotz exploited.
It has also been noted that the PS3 is much cheaper than IBM's Cell blades, and that for certain kinds of supercomputing tasks, that more than makes up for the lack of low-latency high-bandwidth interconnects.