I’m almost certain it will work, although I hope they’ve provided shortcuts so you don’t have to walk around what’s essentially a large menu. The avatars are sort of bland, though, and maybe it’s overall a bit too much like The Sims to my taste. Nevertheless, the idea of hanging around amidst avatars and not just scrolling through menus á la Xbox Live is indeed exciting.
Everybody loves decoration and customization. The idea of Sony’s answer to Live’s Achievements being virtual objects you can showcase in your virtual apartment (or perhaps even wear?) is just genius.