BUT! the point in all this is, that I was trying to make, but no one else seems to have realized is that after she gave it to him he didn't want to wear it. That was when they were still together. Don't you think, if he was a decent boyfriend, that he should have given it back to her at that time (with a thorough explanation of course) considering she spent a lot of money on a gift for him that he likely just tossed on a shelf?
But now, after all's said and done and assuming you don't care about her friendship, you don't have to give it back to her. It's now just your choice if you want to take the high road or the low road on this one.