Yes, they released it, and yes, there were problems, but I think they've done a pretty good job of addressing the problem. The new systems aren't having the problems the launch ones have had and they've fixed people's systems and extended their warranties.
The funny thing is, they havn't received hardly any negative press over the issue...in the meantime, everytime sony turns around someone is saying something negative about the PS3 or Sony is caught in another lie. It's not the PS3 that's fucking up either....it's Sony.