The seller didn't care whether or not I shipped it back and I ended up keeping it. It's usable after the FW update, it was a disaster without it, I wouldn't have tried updating had it not been free. As long as you don't invoke the dictionary after it enters sleep mode or it'll screw up or freeze. Sometimes you can partially recover if you hit the home key quick enough; eventually it gets screwy enough that you'll want to reset it anyway.
I picked up a couple previous gen. models, they're a heck of a lot more stable and I prefer them. Gave the newer, buggier one, to Gyp.