I'm surprised at the number of people here just siding with Apple and towing the party line. The OP had his watch stolen. He sent it in to Apple in good faith, and someone nicked it pure and simple. Apple made him the offer, many here think he should have accepted that, which is fine. But the OP is perfectly entitled to reject that offer and ask them to improve it! For goodness' sake, he wasn't looking to pull a fast one. And Apple's response to a reasonable request to negotiate was to take all offers off the table! Sorry, but that is not reasonable behaviour from any company.
Does nobody here think that Apple went a bit OTT in their stroppy response?