If your "top" toggle switch is in the up position (piezo only), your "bottom" toggle SHOULDN'T make any difference in the sound whatsoever. If you have that "top" toggle in the middle position, then all pickups are on and the "bottom" toggle will indeed change the sound. Also, be sure you're plugging in to the Piezo/mono output and NOT the magnetic/stereo one (this output does NOT allow for the piezo pickups to work). And. . . That piezo system is UNBELIEVABLE!!!!!!!!!! Especially when using an acoustic amp and an electric amp using BOTH outputs!!!
Even when the piezo toggle switch is in the up position the magnetic toggle switch still alters the sound. I tried to adjust the bass/treble/mix of the piezo and I made the sound much better than what it was when I bought the guitar, but I'm still sort of confused as to why I'm in piezo only mode but I can still alter the sound with the magnetic pickups.