Reformatted my "4GB" player, now is currently 2GB, which matches the chip serial number i found.
A point to note, i tried formatting with the Disk Tool with the Partition and Encrypt tab to minimum, and there was an error message of "Not Supporting This Disk Type". Next i tried sliding it to maximum, was able to format and ended up with about 17.8MB (which was the non-encrypted memory). Finally i slided to minimum again and format, and its back to 2GB.
So altean's method worked for my case.
Although my "4GB" ended up as 2GB, still i consider myself to be lucky as many others in this forum ended up with 512MB or 256MB.