Just got off the phone from the Sony support line. I've been told to take it to a service centre and that it will most probably be replaced (I do hope there are some in stock somewhere...).
The last two posts are interesting - I was one of the first PRS-650 purchasers in Australia, and have had my reader since September last year. I haven't had a problem with it until last night's catastrophe. I only found out about the firmware update last night, while I was searching for a solution to my problem.