Thats the problem, you are only renting it, so you never own it. Due to you only renting it, I am not sure why they charge a fee when you first 'buy' it, that is comparable to what it costs if you were to buy a PVR. But if you ever cancel the service, you have to give it back to them, thusd losing that money you have spent. I can see you point though, you just want a unit with a bigger harddrive, and I think they should accommodate that with a slightly higher rental fee, rather than charging a whole new setup fee again.. But there isn't probably too much that you can do about it. If you are in a telstra cable area you could get one of telstras units. Or you could get a tivo, which you actually end up owning.
The only thing I think I can do is to complain and try and find someone at SKY who can see reason, however that is proving to be the impossible task...
I have a Tivo, but it won't record SKY channels and I'm not in the Telstra area... so I'm at the mercy of the monopoly provider.