It certainly sounds shady to me. What I can't believe is Apple would even bend to Gizmodo by sending them the publishable letter.
It surprises me because I can't imagine Gizmodo having any right to withhold the phone from its rightful owner (Apple). Like "Oh we have your missing property, and we'd love to give it back, but you have to do something for us first". I don't know the legal system, but that just can't be right.