Thing to realise is - is the firmware does *NOT* update the firmware on the drive as far as I know, you should think of the nas as a low powered Linux PC. The firmware updates the software on the drive, but not the electronics of the hard drive. I don't know if it updates the computer side of the electronics, but my initial thought is that it does not hence you can downgrade quite easy to lower firmware versions.
I remember when peoples xboxs' went RROD after a forced update - people said what you did 'it was ok before' but the fact was it would have gone RROD simply on the next power cycle in any case. In your case if the drive its self has crapped out then I think it was purely coincidental that it did it after the firmware update.
For what its worth I have also lost data when my 8TB ShareSpace crapped out, it was a software/firmware issue after update. The drives were fine, but the software on them prevented it from booting. Also because it was a striped raid it meant plugging them in to a PC to recover the data was not an option for me. I sent the unit back for a replacement. It would have been impossible to backup that amount of data anyway. It takes the ShareSpace 16 hours to rebuild its own array lol.
Bottom line is (I have found from experience) is to NOT upgrade your software/firmware if you don't really need to. Its not worth the risk of losing the data. I don't mind on my MBWE's because I have 5 of them and like to tinker (you should see the software that can run on them) - its awesome, but my sharespace will never ever get updated no matter what new features come out. I simply can't afford to lose all my home videos, photos, sound recordings etc... Basically I have entrusted WD with my digital life and have been bent over by them - I won't do it again - lol.
Don't get me wrong I like the ShareSpace and MBWE - but even the ShareSpace regardless of how WD market it is a low cost consumer Item, you would pay more for just the BOX for a Qnap. I guess you get what you pay for.