iriver just doesn't offer the latest firmware on their homepage for the wifi models.
1.21 is an old one, if you were using that then it should download 1.25 once you start the upgrade process. And it should not brick going from 1.21 wifi to 1.25. And your location still does not matter whatsoever, if they're really telling you that, they're trying to blame you for something that isn't your fault.
Basic firmwares are not offered to wifi devices so there is no way any reader could automatically download that by itself.
If it's an US device you'd have to ship it to the US I think, the Germany based service only is responsible for Basic / German Wifi models I believe.
Shipping costs are the main reason to not import a reader from overseas, it always sucks if you need service (even if the company is willing to provide that service). It sucks double if iriver is trying to pass the blame on to you...