its just cheap hardware thats all, you have an 8g player for £38, you dont get much in quality for that price, only pos thing is to try a mini amp that fits inline with the headphones, see this link for the excellent Fiio E3 mini amp
http://mp4nation.net/catalog/index.p...roducts_id=253, it improve audio and volume, not sure if its what you were thinking though, or there is an updated version, the E5 due out Dec with dedicated bass boost, and you are right, firmwre is not the solution for you