I just wanted to also chime in and let everyone know that some manufacturers are selling these hacked versions directly. I purchased 25 of these units that were advertised as 2GB. When I actually received them I found out that they were 512MB hacked versions.
The manufacturer is Shenzhen Sky Electronic
and I sent them an e-mail complaining. My sales rep told me that he will get with his engineers. I immediately received an e-mail back from my sales rep who told me that everyone in America is buying these "upgraded" versions and that he can sell me real 2GB versions for $10 more. I told him to take a hike and went with a new vendor. We took one apart to verify that it is a real 2GB from the new vendor and it sure was so I bought 100 more.
I cannot find "Shenzhen Sky Electronic" on Ebay but I am sure that they are there somewhere and need to be blacklisted. If you can find them I would love to see what they are selling and how they are wording their ads.