Need an opinion

I've been a loyal at&t customer for about 5 years years now. A year ago I went to the at&t store, and bought an Lg-vu. 6 months later I lost my phone. Good thing the phone was insured through at&t. Anyway I paid the insurance company 50$ for a new vu. The phone just got a hardware upgrade so suddenly the phone is not working correctly in the New York City area. I called the insurance company, and they sent me a new vu. The replacement also had the same issue. I called at&t, and told a rep about my issue. He said that sometime's it happens that a phone is not compatible with an area. So he suggested for me to speak to the insurance company, and request another phone besides the Lg-Vu so I did. Now I need your opinion on this. The supervisor told me that they can "make an exception" and replace the vu with the samsung solstice, but I would have to pay another 50$, and return the lg-vu I purchased from them back to them. I'm no genius, but then again I know when someone is trying to jerk me around. I don't know much about this type of insurance. If anyone has any opinion or comments about just post it. Thanks

Funny thing is that I put my simcard in an old motorola for 2 days, and the calls were clear as a bell incoming and outgoing. I'm a little confused about the whole deal. Should I return to them the lg-vu I purchased from them? I dont think I should take the loss. It's just not a fair deal. I bought the vu from them, and now I have to return it to them, and pay another 50$ on top of that what do you think? I don't care about the money, but If I give them the phone I'll feel like I've just been jerked.