Thanks for the responses. I did return to the shop with my partner and we asked to see the manager. Only the deputy manager was there. He repeated what the shop assistant had said and despite prolonged discussion stating that our contract was with Game and the item was bought in this condition etc. refused to budge. Basically, he stated that Sony would not reimburse Game for items with impact damage (even though it was sold in this condition and return was attempted the very next day) so it was not their problem. He then said that he had not the authority to do anything else and said that he would try to ring the area manager to see if he could authorise an alternative, but returned stating he could not contact him.
He then said that the area manager might be in the store today.
Basically, they are treating this as if we caused the damage - which we did not. Now I could understand this attitude if we had possession of the item for some time, but we bought the item at 6.55 p.m., got home around 8, had dinner, opened the item, checked to see everything was there, set it up and when playing the demo UMD noticed the small crack (under the screen and on part of the body of the PSP), it was not really noticeable with the PSP powered off. We then packed everything up went to bed, got up at 6 in the morning to go to work as most West Dublin residents do and brought the PSP back at the first opportunity the following evening. The crack is actually so small that if we had caused the damage I would not bother to bring it back. However, I will not accept to pay hundreds of euro on item which already has a flaw even if that flaw is small.
I will either call to see if the manager is there today or Monday (I might wait until Monday as then I can print some information from the ODCA website to bring with me as backup)
In the meantime I have logged the complaint with ODCA, Consumer Association, Game HO in the UK and Sony.
The one lesson I have learned from this is that I am going to check products I purchase for physical damage before I leave the shop, if at all possible to do so.