This has been a common rumor.
The GP32 will play other bitrates. I havn't done a comprehensive test, but I know that 160kb/s works, and 256kb/s seems to usually work. I've got a couple 192k songs on there now, I'll listen to them at work and let you know.
Some songs (I'm not sure what bitrates) crash the GP32 when they finish with either an exception on Mr.Spiv's firmware or by simply putting the GP32 into an infinite loop.
It could be that the higher-bitrate songs are the ones that cause this, but it'll take more testing. I had suspected that it was ID3 tags which were causing it, but have now ruled that out.
I have yet to see a variable bitrate song work.