There seems to be no clear answer on this subject - mostly because no test case has reached the courts to give us one.
People will no doubt cite the Arogs, Kodak and Ebuyer cases that have been talked about many times over. They are all unique and different.
In your case I'm inclined to think the email you had was simply an acknoledgement that the order had been recieved and would be processed. At this point they had not accepted 'the offer' you had made to them and had every right to not form a contract with you. If the money had already been taken from your card it may have been different.
The law aims to protect the consumer but also the seller - in this case they may well be telling the truth and can't get more stock at that price.
Ultimatly you have to decide if you want the hassle of fighting it out or just accept it as something that happens in life and get on with another purchase.