The function of firmware is to keep all of the hardware working at full capacity. There are usually many updates to firmware after the initial release that would help the hardware to function properly throughout its life.
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Yes, you can The firmware goes across board to all models of PSP. This includes the Customer Firmware and the Original Firmware.
Canon copier firmware or harddisk software?
This would depend on what firmware you wished to update. Most firmware is only covered by their manufacturers official website and using other firmware would invalidate your warranty.
The newest known firmware for the PSP is 5.54
Type *#0000# to show firmware version.