Can you post a copy of the e-mail from Amazon? You should obviously delete any identifying information first.
So far as I know, any retailer in the US can refuse to sell you stuff - but in the case of the Kindle Amazon is no longer a retailer but a service provider. I think they may have to give you a full refund on your Kindle and all your Kindle purchases. The idea that Amazon would take the position that the Kindle is usable without access to the Kindle store is laughable. The Kindle has been very purposely designed to only work with the Store. There is no other source for DRMed ebooks that Amazon considers legitimate.
I don't think it matters if Ian is at "fault", i.e. if Amazon has a legitimate reason for banning future purchases. If the fault isn't with Kindle related purchases, then Amazon must continue to allow access for Kindle related tasks.