Apple's iPhone Diagnostic Testing?

Hey everyone,

So, my iPhone was having big time issues with the headphone jack. Whenever I would play a song only the instrumental would come through and the voices were usually faded or muffled. My phone has never had any water damage nor any type of physical damage. I made a apple appointment and went in to have it checked out by a technician. After they checked it out they said that the damage would be covered under my warranty and they wanted to exchange my phone. I told them that's okay as long as the phone wasn't used or refurbished and they assured me it was new. I was very happy that I could get this fixed under warranty, but then the apple tech ran a diagnostic test and said that the phone had to be sent in to their headquarters to get fixed.... It made me a little mad because the closest apple store to me is about 30 miles away and I didn't want to drive back and forth. I would have much more preferred if they could fix it in the store. He also said it takes around a week to get my phone back and if they can't fix the problem then he would replace my phone. I opted out since this was my only day off considering I go to school and work full-time; I really didn't know if I would be able to come in during the scheduled time and I don't want to hold on to their loaner phone and seem like a thief or anything. My question is, what is the diagnostic test? Why did the tech suddenly change his decision to send my phone out instead of exchanging it? He already had the replacement phone in front of him. Did I do something wrong? I feel like I was to blame, but I'm not sure what this was all about. I'm considering sending my phone now... but I don't know when I'll have another day off to visit the store again :/.