Unbelievable. No, a repair is definitely not flashing it. Besides, it's not faulty. Flashing brings with it, its own headaches. I'm shocked they even suggested it.
Thanks for bringing light to the fact that I should never deal with Giffgaff. They sound like a right bunch of cowboys.
I hope they do the right thing and refund you. You have consumer rights, don't be afraid to use them. Threaten them with small claims. I bet they'll change their stance then.