you do need custom firmware to play these games. you know u have it if your firmware version ends with a "GEN" "M33" "OEA" or is 1.50. dont ask me how to get it. just search psp downgrading and there is altlest 200 videos of them.
Difference Between ISO and CSO CSO is smaller ISO is bigger
CSO requires more battery life and for the CPU to be at 333 or it wont run properly
ISO can be left normally
CSO and ISO can be 1 file
CSO is never recommended for fast paced gaes like Midnight Club LA
in any game you can sometimes notice some lag with CSO