If it's faulty, return it. You should not have to put up with problems, unless they are caused by your own use of the phone.
Whether the N4 is better than the S5 depends on what you mean by 'better'. Better specifications, perhaps....better manufacturer design, quality, and reliability, it's probably too early to say.
As belodion says, you paid for the warranty, so use it.
As far as "better", would you use the pen if you had it? I use mine all the time, so I prefer a Note series phone, but I could probably get used to using voice input on an S series. (My fat fingers are a problem on a keyboard or with small checkboxes.)