Mods please move this is needed!

heres the thing i won a auction on a pram in Ebay and seller has just emailed me this.

"Hi there

I believe you won the pram I had listed, however, I was kind of hoping for more than $40.00 as it is worth a whole lot more than that!
So I have relisted the item.

However, I would like for us to have a mutual withdrawal or would you like to work something out to achieve my desired price?

Looking forward to hearing from you."

I have tho paid in paypal so i know i have buyer protection. But what else can i do what should i say and how should i respond to this email. I know they cant do this. How cheeky is that resisting it GRRRRR