The original Distance selling regulations did not have any limits on what a consumer did with the goods in the 7 days they had in which to cancel the contract. The new consumer contract regulations DO have limits as I stated above. They are not greatly worded but do offer retailers the chance to argue that the consumer has handled the goods beyond what is necessary and thus can reduce the refund. So BOTH arguments made in this thread are correct in some ways.
I suspect that retailers like John Lewis are well aware of the statutory obligations and limitations AND ambiguities and have taken the commercial decision to give refunds in more cases than they strictly need to.
I suggest that people stop relying on what is said on retailers' sites and indeed on consumer advice sites and just look at the actual law as it is written. Unlike many regulations these are understandable and should be used in preference to any and all "interpretations".
So read and enjoy
http://www.legislation.gov.uk/uksi/2013/3134/contents/made
It is also useful to read the whole of a section, as if I had bothered I would have noticed 34 (12) which reads "For the purposes of paragraph (9) handling is beyond what is necessary to establish the nature, characteristics and functioning of the goods if, in particular, it goes beyond the sort of handling that might reasonably be allowed in a shop" Which almost blows a hole in my argument, but for a joystick, a savvy customer could still argue that it is REASONABLE to try out the handling of a joystick in a shop and many reputable games shops could have demonstration models on hand. If this is the case then the argument that taking it out of its packaging could still be reasonable.
It is also worth noting 34 (11) "Paragraph (9) does not apply if the trader has failed to provide the consumer with the information on the right to cancel required by paragraph (l) of Schedule 2, in accordance with Part 2. " which means that if the retailer has not spelt out these rights in the way proscribed then all bets are off and the consumer can do whatever they want.