Hypothetically, faulty new gear: repair or replace?

It depends. For Canon equipment I'd have it repaired because I live a few minutes from the service center. For Sigma, on the other hand (the only other manufacturer from which I received a dud), I sent it back to the retailer for a new copy.

I chose "repair" but it would depend on the warranty. As some have said, some places have a "No questions asked" replacement policy and you don't really have a choice.

Your criterea was that is was a minor flaw and thats what I based it on. If it was the "it doesn't work" variety I'd ask for a replacement.

I agree with the thought that if its a problem with the manufacture of the item you could get a 2nd one with the same problem.