If you are 100% sure you specifically ordered the TV with S-Video, then it was the retailers fault and technically they should pay for the shipping for the replacement, but the chances of them actually doing it are pretty slim yes?
If its a good size TV at a cheap price and its going to be put into a cabinet, then you'd probably be better of holding on to it. There's a basic comparison at Oscars
http://www.oscarcontrols.com/monitors.shtml but I don't know how relevant it'll be to you, and unless you're really hard core about your graphics then you'll probably be happy with what you've got. (You ideally wouldn't be watching DVD's on your future cabinet, what with the screen tilted the way it is, but for the times you do - at parties per say - it should be suffice.)
Some other things you may want to check though:
a) Does the TV turn on automatically when the power on the wall is turned on?
Many new TV's go straight into standby mode, so you'll need the remote handy if your cabinet's being turned on and off alot.
b) When turned on, does the TV go straight into VIDEO mode?
I've found quite a few TV's that once turned on, the video channel will need to be selected manually.
Now these aren't major things and have nothing to do with S-Video (I really don't know why I posted them), but they're somewhat overlooked - remember your TV's going to end up behind glass. You dont want to loose the remote or get flat batteries because it's going to be be a pain in the ass switching on your cabinet otherwise!