Are you still curious why the new smaller, cheaper Sony PlayStation 3 does not support the optional installation of Linux as its larger, older brother?  It's not because Sony wants to stifle independent development or put the hurt on free software.  Like so many other things in the world of big business, updating the OtherOS function to work with the new PS3 just wasn't cost effective.  Games I Like did a little digging and came up with some interesting yet understandable answers from the PlayStation 2 Linux community.

The PS3 Slim is a major cost reduction involving many changes to hardware components in the PS3 design. In order to offer the OtherOS install, SCE would need to continue to maintain the OtherOS hypervisor drivers for any significant hardware changes - this costs SCE. One of our key objectives with the new model is to pass on cost savings to the consumer with a lower retail price. Unfortunately in this case the cost of OtherOS install did not fit with the wider objective to offer a lower cost PS3.  We'll see if we can get the offical OtherOS page updated with something to this effect so that an official explanation is provided.

Driving down the production costs of the PS3 meant that there was no money to spare for updating a little-used function of the console.  The OtherOS isn't going away entirely though.  Any current PS3 that offers the function will not lose it through a future firmware update or other sinister system tweak.  Again, sorry to see it go from the new hardware, but it's an justifiable cutback.