ok the update means you can now play Flac files and I believe that means gapless for that file type... you probably missed the previous update as Sony rushed this one out a few days later which restored the bass depth, the highs have been tweaked slightly they're better defined imo.... Purk is the guy to ask, he's real helpful on the technical side.
I use SonicStage to upload my music but this will mean your uploading music into Sony's own format Atrac... I'm going to re-rip all my music into both Flac & Wav in the new year and will probably use DB-Poweramp to do it.
Now-What is a genius at what are the best programs etc. so I'd pm him on that topic... if all else fails hunt down Turokrocks, hth.