@ chunky, I doubt that'll ever be allowed, stores are often franchised and even if they aren't they have different stock allocation to the web site or CS staff. if the store manage could authorise a replacement out of his own stock, then the OP would presumably have it already...
as for the options you've been given, a refurb phone is pretty much the only option you have mid contract as has been pointed out, you're pretty lucky to have had a new one (if it was new...) before. as for getting a SGS2. I don't think that's going to happen, it is way out of the Dell's league, much more than a replacement. The desire S is certainly the best on the list from my point of view, maybe not the biggest screen, but certainly feature wise it is more than capable of everything you've requested. it's a much faster processor, better memory, more up to date android version, i can't see a reason to turn it down. I'd worry if you push to hard for the SGS2 that you'll end up with nothing. But the cynical side of my brain says you're fishing for a free upgrade, if as you say you don't know much about phones, I can't see why you wouldn't take one on their list.....
check the link for a comparison between the desire s and the dell.
http://www.gsmarena.com/compare.php3?idPhone1=3353&idPhone2=3776JOJO