Got My replacement (almost 3 months)
Guy at distributor said I am person #7 with this problem.
went home. Charged the new camera.
so there you have it. The audio is SLIGHTLY better, but my iPhone (and almost every other video I have seen from previous Contour models and every other GoPro) is FAAAARRRR better.
So if you don't mind audio that sounds like you're talking through a wall, grab the contour. If you are a person who feels that spending 500+ on a fucking camera should at the very least produce decent audio - go with ANY other camera.
still undecided as to what I'm going to do....