I've not updated yet..although I will do, as the OtherOS never really worked properly due to the total lack of hardware support.
Did experiment for a while trying to make it play videos with VLC (and other players in the end), but it just ran so slowly..it was impossible. You could get the sound working but never any high resolution video.
It's still frustrating that Sony are removing this feature, BUT i understand why and they are legally justified..we agreed to it in the EULA when we started using the console, and so c'est la vie. I own my PS3 hardware and I can do what I like with that, but Sony own the software..I just have a licence to use it