That is correct,
Just remember when downgrading, your PS3 Hard Drive will be formatted, so remember to backup your game saves.
Also if you backed up games to the internal drive they too will be deleted, you could either backup to external drive or ftp to your computer from internal drive.
Wow, only 9 posts here and you're already the expert. Just yesterday you were asking where backup managers install to. Anyway, please make sure of your facts before you say it as the truth. The downgrade does not always format your system. It seems that the only systems it formats are slims that have a portion of their firmware installed on the HDD because the NAND is to small for the whole file. Now, as to which slims this is the case on, I'm not sure, but if you have a slim and are going to downgrade, you might want to make sure you have everything backed up. As for phat ps3's, Gary confirmed by downgrading all 3 of his to 3.41 that were on 3.50 and none of them required a format.
I'll backup my savegames anyways.
I have a PS3 Phat 40GB (so I don't think that I'll put any backups on my internal HDD :S)
Thanks for the info mark.j.tarr and chesh !
I'm far from an expert, I've been involved with Jailbreaking iDevices (apple) since the early days both testing early releases and providing feedback and am new to the PS3 scene.
My approach is more from a newbie that has read and read forums and posts, and am trying to pass what I have picked up, on to other newbies.
I asked about the backup managers and other confirmations because as you rightly state, I shouldn't pass this on until I am sure it is correct, I have received answers form several forums and sources to confirm my answers before I pass it on.
As for the formatting, its good to know and useful information, but I don't want to be the one telling everyone they don't need to backup to find people have lost there game saves. If in doubt its always worth a backup.
Hopefully in time I will have more devices for testing purposes and can test early releases and Beta software and can pass more informative information on.