You can create inventions, then use a camera tool make copies of them, and give them away. A simple system of "hitting a button at any time and following a simple series of operations." will allow users to report objectionable content, including copyrighted content. Water is currently not in the game, but "it's something that would be very high on our list of priorities." Gravity change is also said be added later on.
Whether install will be mandatory is unknown, but Smith simply said: "The HD install is perhaps around a gig. Perhaps more or less." LBP will run at "30fps at 720. The game uses a lot of filmic techniques like depth of field and motion blur, so this fits the game pretty well." There will be "VOIP and PS Eye support" but no further details are revealed. Finally, SIXAXIS will "let you look around, point at things and change your facial expression." For more details, read a transcript of the interview here.