Ipod touch at best buy warranty?

I bought a second year ipod touch at best buy in like december. well the ipod is no longer good it was having malfunctioning problems and the lock button at the top jammed. so I went to best buy to turn it in and get a new one but they just took my ipod and told me that i would get a refurbished ipod touch. now here is my problem, I thought that i was supposed to get a brand spankin new one and not a refurbished one? is that normal or did i get swindled? also when it comes is it going to be a 2nd generation or a different generation, because i really want the 4th generation. Thanks for your time...(sorry i talk too much)