I have just been through a similar situation with a mobile phone supplier and a bluetooth headset.
I was told by the shop that it was not their problem, and that I should send it back to the manufacturer. This did not seem right so I contacted CAB and Trading Standards and was told that I had a contract with the supplier (shop) and not with the manufacturer, and they have a liability for 5 years not just the 12 months waranty. I eventually was given a replacement and a refund of the price difference as the price had droped since I bought it.
Call your local Trading Standards office and they will talk you through your options and can also send you a very useful information pack to take back to the shop next time you call.
It seems that many retailers are not aware of their obligations to the purchaser, and may be acting out of ignorance.
My advice is to explain what the suppliers responsibilities are. Keep cool, prepare your argument, and leave with a satisfactory result.