I'm having the same problem. It's not factory 2.6 or anything. I'm pretty sure it came out of the box as 1.x, possibly 2.00. It came with the free spider man 2 umd.
ANYWAY, this is really doing my head in, as icerx said it flashes for a few seconds then show the 'disc could not be read' error. Restarting makes no difference. It still works absolutely fine, only it still has 2.60FW :( please help!!!