The recent hack on PS3 where the private key used by Sony to sign their games has been recovered is of course a very bad news for Sony. It finishes to open the door to piracy which started in January 2010. In theory, anyone could now sign (pirated) software to run natively on the PS3.

It is a case of badly implemented cryptography algorithm, in that case, the use a proprietary signing algorithm with a faulty random generator.
Crypto 101 says to NEVER use proprietary/secret algorithms. Now Sony’s will pay the price for not listening :)
The PS3 hack story is a great example of badly implemented cryptography which is as important as the choice of the security controls used to protect an asset.

BBC NEWS ARTICLE

The start of an answer from Sony, which seems to indicate they did not grasp the severity of the issue when first announced about a week ago
MYCE ARTICLE and THIS ARTICLE TOO with more info.

And finally, much, much more info about the hack on the PS3NEWS SITE.