Most ISPs in the UK do. Personally I use my own router but I have helped friends set up their connections.

Usually what happens is that they send a box with a router + modem + filters etc and instructions as to how to plug it all together.

They also give you a piece of paper telling you the SSID and key with strict instructions not to tell it to anybody.

I imagine the router also calls home at a regular interval and downloads updates automatically, so if there is a security issue it should be rectified relatively quickly.