I've been told on two occasions that no refunds are allowed at all according to the iTunes Store Terms of Sale. I think this condition should be changed, particularly as in Europe this falls under the Distance Selling Regulations, and for credit purchases it is considered a Customer Not Present sale.
I complained and did eventually get my refunds, but they seem to be discretionary - dependant on some junior back-office clerk who looks at your history of purchases and decides whether to refund you or not.