I had a similar problem with the first S3 Tivo I got from Telecom. It would periodically go unresponsive, go grey screen and then have to be rebooted. I placed enough calls and 'suggested' this wasn't what I expected for such an expensive box. It took about 3 weeks for them to escalate it to Aus, and then arrange a replacement (which arrived very quickly after that). Never found what its problem was, but the 2nd unit has worked fine for 8 months now.

Suggest you push for a replacement unit.