Those sort of gag orders are pretty standard... nobody like bad publicity.
HOWEVER, in the case of a device that could cause injury if it malfunctions in this manner... I think Apple is looking for even more problems if a lawyer can prove they tried to hush up a problem and someone got injured as a result.
its dangerous to not let news sources know about this. could be a very rare defect that needs to be addressed. What if the father had kept it in his hand? Or if the girl was around and put the ipod to her ear to listen to the hissing noise.
This is why I would not waste my money on apple products. They are worthless. I still cannot figure out the whole Ipod, Itouch craze. I mean my cell has a built in MP3 player and it has a 3.5mm port so I hook it up to my truck or computer speakers. As far as all these Apps, most seem quiet stupid. And if you want to play games, get a handheld like PSP. I think I am going to submit the Icrush app to the app store. It will be the coolest app ever. I will give people step by step instructions on how to crush there iphone. And as you crush it, it will make an aswesome breaking sound.
I would tell them to stick their refund and ask for compensation (for tramua caused to the daughter etc). Then I'd create such a media shit storm with my youtube vids, media interviews (consumer programes love this kind of story) and my own website (myipodexploded.com maybe!). I would document and report all of my correspondance with Apple publicly.
Also, I'dgo to trading standards and report Apple and Argos (the shop) for providing faulty goods and refusing a refund.
Apple needs to understand that as long as only the facts are reported, there is not a damn thing they can do about it. Any company with these kind of business practices needs to be outed with as much publicity as possible.
If my iPod simply stopped working, I'd assume some sort of manufacturing flaw occurred and would be happy to get a full refund (and probably buy a replacement with that refund.)
An exploding device is another story, especially being my kid's device. I'd have a hard time keeping silent in these circumstances. If the iPod really did blow up and jump 10 feet, I could just imagine the damage it would have done had it been in a person's pocket. Thats a more of a safety concern, than a nuisance if you ask me.
That said, considering the type of failure (IE explosive). If I were Apple I may have re-worded my generic response and told the individual to allow me to collect the defective unit for analysis, and then follow up accordingly once the failure mode had been properly analyzed, rather than asking them to be silent before actually bothering to find out what caused the problem.
That's pretty creepy that it blew up and got sent 10 feet into the air. If it was more money than just a refund, then I would keep my mouth shut but simply getting you a replacement is the least they could do.