Well here's the part of the letter that I was referring to, word for word:
"Enclosed you will find your original iPod product. Of the issue(s) reported concerning your iPod product, one or more were found to be within Apple's specifications for acceptable performance, usability, and/or functionality."
To me, this sounds like they're saying my inablity to use the '1' and 'Q' keys isn't an issue and they didn't feel the need to fix it. The letter goes on to say that I should try the "Five R's" or redownload iTunes, which I've done several times.