I get the feeling that he will wait until he gets the player back before sending a new one, if he does indeed do so at all.
My advice would be to weigh up how much it costs to post back/file a claim and maybe ask for a partial refund.
2 gigs to 256mb is a huge difference and makes it hugely restrictive in what you can do with it, so make sure you mention that if you decide to go down that route
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