Sale of Goods Act
Not just fit for the purpose intended, but also of satisfactory quality (what a reasonable person would consider satisfactory). And it matters not a jot what Steve Jobs says - he can say the phone can actually increase the efficiency of your hot water boiler if he wants, but it doesn't affect your rights under the Act. Plus, the Act puts the responsibility on to the retailer, not the manufacturer, to refund or replace the item (your choice).
And if the retailer refuses, you can insist on the phone being sent away for an independent evaluation, although I can't remember who pays for it - probably you up front, with the retailer refunding if it goes your way, but don't quote me.
I'd love to see someone try it.