I've been an activist on many fronts for ages, and suggest you fight this to the end.
Don't waste time with the Better Business Bureau; they are absolutely worthless. Businesses pay outrageous fees to them to display their logo; that's about all they are good for. I've never had one single positive result from dozens of complaints filed with BBB offices throughout the nation!
Send a letter (with Signature Confirmation) to the CEO of Sony and raise hell. Threaten to report them to the attorney general/consumer affairs department in the state you live in AND where their corporate office is.
If you purchased your product with a credit card, immediately notify your credit card company and tell them you are having a dispute regarding the purchase and Sony is ripping you off. Many credit card companies will stand behind the consumer in a situation such as this.
You should also state in your letter to the Sony CEO that you will file a complaint with the Federal Trade Commission, which sometimes does monitor these types of problems.
I also recommend to others that they tell the company they are having problems with that they will submit their case to Judge Judy, and will tell all their friends and colleagues to think twice before buying a Sony Reader.
You can also tell the CEO you will contact journalists who write about technical issues if Sony doesn't resolve your problem immediately!
I am so careful with my Sony Reader (and other expensive devices) because I (as I am sure you do) work too hard for my money. Sony needs to stand behind their product, unless it's obvious you dropped your Reader in a toilet or ran over it with your car.
Check out my blog which has some consumer posts on it. My contact info is there too, and I am happy to offer consumer advice free of charge; been doing it for years.
Crusader
Palm Springs, CA
http://crusading4u.blogspot.com