According to PSP Fanboy, the new 3.50 firmware unleash the potential of running your PSP in 333 MHz, about 25% faster than the curren 266MHz. The reason for not having the 333 from the start is that it drains the batteries really fast…and I guess that’s still a fact. Developers have confirmed that the new firmware actually unlocks the full clock speed use so I guess we will see some reports about how long the batteries last while playing the new games in the near future.

New games developed from this point onwards will be able to utilize the full clock speed of the PSP. This is intrinsic to firmware 3.50, and any new games that require 333MHz will need firmware 3.50 or above.

Confirmed: Firmware 3.50 unlocks full 333MHz speed [pspfanboy.com]