I just did what you described and got only 8GB from the 16GB Transcend card. My camera is a Canon EOS 400 (European, D REBEL XTi in America). The update history of newer firmware didn't mention fixing the problem, but I downloaded firmware version 1.1.1. After the update from 1.0.4 to 1.1.1 I reformatted the Transcend: 16GB available!!! Succes.
email sstaatsbigfootcom, September 2008