I have the same problems with vodafone, only my problem is with a mobile broadband dongle. I think the company is a joke and their costumer service is a lot to be improved. I was told when i took the contact on my dongle that i could cancel anytime with a 50 day notice, that they are not saying i cant do and if i cancel i will be charged a further £80.
Personally i will NEVER be dealing with the company again!
I would say that if the fone is faulty due to no fault of your own, you are entitled to a replacement fone, however, vodafone, being vodafone will probably disagree!
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