..same issue exactly..
Hi all, joined the forum just to comment on this issue...
My PRS350 has exactly the same problem and looks almost identical to the shot above.
Bought in Dec 10 so still under warrranty- took it back to Waterstones who packaged it off and sent it back to Sony- no questions asked.
Today I got an email from Sony for money to repair it!
I called the repair centre who said this was a symptom of the reader being dropped or twisted. i explained that I have not dropped or twisted it- one night it worked fine, the next morning it had this problem. The chap at the repair centre gave me the number for customer service.
I've just got off the phone from them where I explained in no uncertain terms that I look after my reader and have not dropped, twisted it etc at all. (If I had broken it myself I would have just gone and bought another!).
This has now been 'escalated' so I am waiting to hear back (no timescale given).
I am expecting that someone at Sony will see sense and repair what is a faulty product. If not, I will not give up chasing them- I love my ereader and think it's way better than all the other readers out there (including the ubiquitous market leader) and I would hope that Sony won't let themselves down in such a competetive market by accusing a customer of lying.
I'll let you know the outcome...
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