I recently cracked the screen of my iPad 3. Made a genius bar reservation, showed up at an Apple Store, waited 30 minutes, then was told it'd be $300 for a replacement iPad of the same type. A few internet discussions said I might be able to get a replacement iPad for free, but the only free replacements seemed to be reported by women. So I took the deal and paid $50 extra for better support.
The replacement iPad was flaky right off the bat -- flickering screen even with auto-brightness off. I returned it to a local Apple Store and waited while the 2nd replacement was being charged. After 45 minutes of waiting, the genius helping me finally agreed that something was wrong.
Unfortunately, there were no other iPad 3's in the store. I asked if I could just get any iPad they had in the store. The genius told me the Apple system didn't even allow them to change the replacement iPad model. Think about that. Apple built a system that makes it impossible for the people on the ground to do right by a customer.
I waited another 15 minutes for the manager, and then she came and explained my options. I could drive to other Apple stores and pickup an iPad. Or I could wait until that store got a new shipment and come back in. She agreed with the genius that I couldn't get another iPad in the store. Basically, all my options, even with a valid Apple care replacement service contract, was to spend more of my time and effort due to two bad replacement iPads. I told her I'd agree to have the iPad shipped to me.
I'm pretty sure if I went to an Apple store a few years ago (and certainly 5 years ago), I'd be walking out with an iPad even if the manager had to "upgrade" me to whatever they were selling at the time. Now, it's about rules, not about making the customer happy. Welcome to the new Apple as they try to wring the last dollar from your hand. While I wait for my replacement iPad, I'll be playing with my new Kindle Fire HD.
They don't give newer models because that would let people upgrade to the newest by throwing their current one on the ground and handing over $50 (with AppleCare+) or $300 (without).