When the PS3 launched, 120MB of its 512MB of RAM were dedicated at all times to the OS. (To put that footrpint in perspective, the Xbox 360's OS only used 32MB.) Luckily, Sony has refined their system.
Over the course of several updates, the PS3's OS has been weaned off RAM, its dependence cut to just 50MB—including the in-game XMB upgrade—meaning that an additional 70MB of RAM is available for game developers to use as they see fit.
No, that's not enough extra oomph to revolutionize the PS3 as a brand new console, but it's likely we'll see a slightly nicer lighting effect (or an equivalent) some time because of it. [PlayStation University and Joystiq]