Have you been making a note of the IMEI number when sending the phone back? Trading Standards generally state that if the fault isn't fixed after 3 attempts it's irreparable and refund or replacement should be sort. (I wonder if they've just been reflashing the firmware and sending the original handset back?)
My understanding is the handset is part of the contract and they must replace with equivalent or better. However, check the small print in your contract.
Rather than just cancelling your direct debit, you should contact CAB or Consumer Direct
to double check that Orange are in breach of contract first.