Lets answer your questions...
1) It happened in the first place due to poor security and a professional dedicated hack. So yes Fail icon here is relevant.
2) Its taken a while to restore because Sony have taken the effort to try to ensure this doesnt happen again. Yes this is closing the stable door after the horse has bolted, but you seem upset that they've "wasted" time repairing the system when you could have instead been playing games. That is an incredibly childish point of view.
3) Why do you need a software update? Why do you think? To prevent the same security breach happening again. If someone steals your keys and breaks into your house, youve got no one to blame but yourself if you dont change the locks and they break in again! So you being upset you have to download a software update to make your system safer is doubly childish!
4) Why is the password server down? Well that was explained in the article if you had manage to control your short attention span long enough to make it to the bottom of the article. It is down due to the high demand associated with lots of people (70+million accounts worth) trying to change their passwords.
Get a life, its a computer game network. Its down whilst its being fixed. It will be back soon. Deal with it!