In a nutshell, there was a rate glitch in that existed on Starwood's website for a few days. By reserving a room at the W Times Square with very particular settings, a rate of $25 per night came up (which should have been $295, I believe, but was mis-entered).
To make a long story short, several hundred poeple reserved rooms at this rate representing over 1000 room-nights. The glitch was exposed, and there were mixed reports about whether Starwood would honour the rates.
Initially, the hotel called people to tell them that their reservations would be changed to the correct, higher rate -- or in some cases, very small (10-20%) discounts were offered. About two days after the incident, the Wall Street Journal published a statement from a Starwood spokesperson confirming that the hotel would honour the $25 mistake rate as a gesture of goodwill.
End of story? Not quite -- some FTers have reported that despite the WSJ story, the $25 rate was not honoured by the hotel. Judging by the fact that I haven't heard many horror stories here recently, I'm assuming that the hotel is now honouring all of the $25 rates as promised.
Hope this helps!
PS -- these are the facts from the thread. The rest of the thread is taken up with legal and ethical discussions about whether Starwood could/should be obligated to honour the $25 rates