i still don't understand the need. let them bang on the router all day long. heck, until i got my new router i only used WEP. now i'm forced to use WPA something or other.
A router will simply route packets. In a soho environment, your router is also doing NAT & PAT ... Network / Port Address Translation and most likely also has SPI (Stateful Packet Inspection) turned on.
One to many NAT allows you to have 1 ip address for the real world, and 2 or more devices behind the translating device. ie. do you have 2 or 3 computers or other devices? 2 or 3 dish receivers with ethernet needs? ... NAT & PAT are helping you hook all those devices up to the internet, with only one real world IP address (rather than wasting 1 ip address per device when they don't need their own unique address, and without you having to pay extra to your ISP for additional IP Addresses).
But NAT & PAT aren't enough ... the crackers (and the millions of zombies in a bot net) can send traffic at your router ... your router without SPI (stateful packet inspection) would generally look through a table (think spreadsheet) line up the port it sees incoming, with the port it translated, and forward that traffic into the device (computer, receiver, ip phone, etc) inside your network. If the device that receives that traffic has a flaw (windows is one of the largest targets currently) the packet may be crafted to abuse that flaw and the next thing you know, a cracker has use of your property.
With SPI .. the firewall portion of your router isn't just translating the addresses (ips or ports), its making sure the packet is known. Either the traffic is coming *back* to your router, and thus is a response to a packet that was sent out from one of your devices ... or the packet is coming to a known port that was set up specifically to handle in-bound traffic.
As for the whole other side of your issue .. WEP vs WPA1/2 ... WEP stands for Wired Equivalent Privacy (or Wired Equivalent Protocol, Wireless Encryption Protocol if you prefer) and as such was supposed to make a wireless connection as private as a wired connection. The simple facts are, a flaw in the way the key was generated in WEP made the communication very insecure ... a cracker with freely availble tools can now crack WEP in 13 seconds or less.
So you being forced into WPA is trying to make it so that you are more secure than you were. And as far as WEP or open wireless goes, these would be protections to keep you safe from outsiders just messing with your internet ... without proper protection, they could eaves drop, redirect you, and capture any online passwords you use. They could also just use up your bandwidth, host illegal content and make it lead to you rather than them ... even if innocent, having the police/fbi/secret service knocking on your door taking away your time while they search .. is still a hassle.