That has nothing to do with hardware. Actually normal GP32's can do that, but the GP32 SDK will only show the DOS (8char) filename. I think that there is one app that uses special SMC routines to read more than 8 char.
Even if it was a H/W limitation, GP32 BLU is the same as normal (except it has a back light of course). At least thats what I think :unsure: