16GB iPad tells me its capacity is only 5GB?

I recieved a brand new iPad today from an Apple reseller and I've just set it up. I tried to download a game but it told me there wasn't enough space, so I checked how much space was free in the General tab of the Settings app and it displays the capacity is 3.1GB and the available space is 2.4GB.
So I plugged it into iTunes and it says on the iPad summary it is a 5GB iPad.
I'm wondering if it's a problem with the iPad and I need to send it back or if it's something I can fix myself? Has anyone else had similar issues and how did they fix it?
And yes, I've turned it off and on again and also tried a hard reset.

My iPad 4 is one month old. It is 32 GB. As you can see it is very straight forward in reporting that it is 32 GB, there are no formulas involved.
I'm not sure what this 5 GB issue is, there is no such thing as a 5 GB iPad.

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    http://tinyurl.com/85w6xwn
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