IPhone 5 stuck in portrait mode after upgrade to iOS 8

iPhone 5 stuck in portrait mode after upgrade to iOS 8.
Phone was fine before the upgrade, iOS 8.1 did not fix the issue.
Have done a factory reset at Genius bar and they say it's a hardware issue and have gotten this response below:
"Now, when you perform an update to any iOS device many system checks are run to verify that all components are working as they should. This is part of the firmware update process. When these checks are run sometimes issues are detected, even if all seemed to be running well previously. When this happens one of two things can occur. Either the hardware will be deactivated completely, or it will be locked in a state of use so that the device can still be used. In the case of the gyroscope for screen rotation, the firmware locks in place so that while not perfect, the device can still remain on some functioning level. This is what appears to have happened when you updated. The software itself did not cause any failure, but it detected a currently upcoming issue and prevented it from becoming worse."
All I want is a replacement but they want me to pay £199 since it's out of warranty.
Anyone have the same issue?

If the device is out of warranty you must pay the out of warranty replacement fee to have your iPhone replaced. If the phone was still under warranty the phone would have been replaced at no charge.

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