The manual states (on page 14) that the storage USB stick or drive must be attached to the rear port. The dongle should work in the front port. The opposite would be more logical (who needs to have easy access to the Wi-fi dongle once attached?) but that's the way Sony's designed it.
So, if you have dongle in the front port and storage in the rear one, it should work. Just make sure the stick is FAT32 formatted, not NTFS as the player won't recognise that file system. To format it correctly, install the stick in a computer open up "My Computer" (or equivelent window in your operating system) and right-click the USB stick/drive. Clik the option to format it and be sure to select "FAT32". Obviously, make sure there are no files on the drive which you wish to keep before formatting. Remove the drive and insert in the S470's rear port.
I think saying there's a massive design fault and everyone should return their players is a bit extreme 😉 Sony have definitely made an illogical desgin decision but the player does work as the manual says it should. As for iPlayer, it works faultlessly on my 470 which I've had since Christmas Day 2010.
