My AC doesn't seem to be reporting the correct "room" temp-I have reset it and also checked the interior settings
HP vs Non HP (HP)
C vs F (F)

We are having high humidity along with high temp right now... (phoenix, arizona)... does it seem reasonable that the product needs replacement??

Any hints??

If the temp in the house is not reaching the temp you have the t-stat set on. Its possible it's a t-stat problem but I would think more of equipment failure. All home owners think it's the thermostat that is bad when the temp rises in the house. When at time its due to neglect of just a good old clean and check.