PSP crackers allow the homebrew in

Via an exploit in the PSP's libtiff package, a user can run homebrew apps on 2.0, 2.01, 2.50, 2.60, 2.70, 2.71, and 2.80 firmwares, via the viewing of a supplied picture file.

Software running via the exploit on 2.0-2.71 firmware based PSP's will have full kernel access to the PSP, but 2.80 will only allow interaction with the hardware in user mode. Previously PSP owners with later firmware revisions needed a copy of Grand Theft Auto to exploit their PSP to allow for the execution of homebrew software.

Kernel mode will lead to the ability to downgrade a PSP's firmware to an earlier version, and therefore the running of UMD image files - although in the near future it's likely firmware won't need to be downgraded at all, considering the access allowed by the new exploit.

Originally discussed and announced on these forums. Expect a PSP firmware upgrade due to 'security fixes' to be made available by Sony very soon. µ

See also
PSP mod chip has set of unlikely specs
Sony releases more PSP firmware
Sony releases anti-piracy PSP update
PlayStation Portable downgrade patch released