I dont understand it I work for purpleworld and I exchange iPods and the minis all the time, if you got coverplan on it its the same procedure as always it gets sent back regardless and customer has to have an Exchange only.
If theres no Exchange stock there or equivelent the customer is entitled to a full refund its that simple, its a Code5 product Return.
It should be the same policy for the electrical stores too, if the stores not sure tell them to check on Eclipse and then Sarg.
I do know Equinox deal with all the Apple related product repairs but then thats the whole point of insurance on many products its a swop over service/ and if its not theres a send away for repair service.
If I was you I would phone customer support number on 0870 600 1550 and ask to speak to head office/DSG, I would advise writing a letter and explaining the situation and try and add proof of reciept/royal mail proof also.
Head office will hopefully send you down Gift Vouchers so you can purchase a new one.
I dont want to say they will 100% but from experience of dealing with "customer issues"/I work on Customer services btw nearly all the time customers have written or spoken to head office(DSG group) they take the matters seriously and since they dont want bad press they just send down gift vouchers right away... and frankly even £200 is nothing to them......
If they dont bend there arm and take responsibility tell them your going to a small claims court, and ultimatly DSG will be forced to shell out since its more expensive for them to goto Court then it is to write off some gift vouchers/but only use that as a last resort!
Goodluck