You'll have to update the firmware.
For the Gen. 1 version, the original firmware (version 1.00.01) did not have thumbnail support. The capability was only added on firmware 1.02.00 (April 1, 2009), so you would not be able to show thumbnail pictures if your firmware is older than 1.02.00.
The latest firmware for Gen. 1 is version 1.03.01 (Nov. 9, 2009).
Don't worry. The procedure works on both models.
My first WD TV was the Gen. 1, purchased in November 2008, the month when it was first released; my 2nd WD TV is a WD TV Live, purchased 2 days ago. I've done it on both, and it works on both.