@Mark: Thanks.
@Mrs.Smith: Like Mark said, sounds like some t*ss*r lost a document. TLS's only job is to take the documents, put then in an envelop and forward them to the embassy. Even that is sometimes too much to ask. Them messing up application or giving wrong advice plus wasting a service fee is why I'd prefer not to use the external party (TLS or VFS depending on which embassy you are dealing with). It was wise to include documents that strictly are not required under EU law (the travel reservation and hotel reservation should not be required). Complying with reasonably instructions (that do not waste you considerable time or money), is a practical approach, even if these instructions are not entirely in line with how things should be done according to regulations.
After it's all done you may wish to share your experience with the EU Home Affairs just so they have more documentation on embassies and extrernal parties messing up the rules or handling of an application.
http://ec.europa.eu/dgs/home-affairs...s/index_en.htm
They are currently discussing new Schengen rules and I suppose any feedback that can help the EU with establishing better rules and instructions so applications are processsed with less hassle would be very much welcome. Even if the e-mail would end up collecting dust in the archives, nothing ventured is nothing gained so I'd gladly spent 10-20 minutes on writing a short mail sharing my experience with the EU Commission (Home Affairs).