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OK, after an initial panic, all seems ok, but that sort of message does not inspire confidence!
I ok'd the restore, and it went away and did something, then it restarted and came up ok, have been around it, played a game, all seems ok. It says the firmware version is 2.41 as well.
I shall keep an eye on it obviously.......
On the PS3 forums, one other person reported a HDD problem with it, but everyone else seesm fine.
Its quite different to the functions of the 360 guide button in game. The PS3 XMB lets you access any function in game - 360 doesn't. But the 360 version is a little more slick and obvious that it was built in from the ground up.