Yeah. It's a hardware limitation. The Slimp3 uses a Micronas MP3 decoder chip to do all the hard work. This opposed to how the Rio Receiver does it as the Rio uses software decoding. So in theory the Rio is more flexible.
The rest of the Slimp3 is basically an Ethernet controller, PIC to control it all and a CPLD to glue it all together. The Barix Exstreamer is pretty similar except it's got an 80186 inside instead and no display.