You can download in the background, but it pauses when you are watching a DVD or Blu-ray Disc (haven't tried it while playing a game).
When you're playing a PS3 disc-based game, Queued Downloads will proceed as normal in the vast majority of cases (I've seen only a couple of times over the past few years where a disc-based game will pause downloads). Bizarrely, though, you
can't download files in the background while playing PSN downloaded titles.
And yeah, PSN download speeds are atrocious and random, and they're something I rant about on Twitter every time a major PSN title releases on the network. Still, I'll accept a little inconvenience in exchange for not being fleeced by Microsoft for the "privilege" of playing games I already paid for online. On that subject, it's kind of funny that EA makes a big deal about its Online Passes on its 360 titles, because they hold absolutely no value whatsoever if you're like me and aren't an Xbox LIVE Gold subscriber. So unless I
really want to make sure that the dev team gets my money, there's really no reason for me to
not buy Used on my occasional 360 title.