I think they should accept "ti'n" as a correct answer though, it is more correct because "ti yn" is ugly pronunciation.
That's not why it's "more correct". Ti'n isn't more correct than ti yn at all, in fact ti yn is more correct than ti'n. Ti'n is what you'll hear and read more often than not. However, in very colloquial Welsh you'll hear people saying ti yn and dwi yn in an emphatic manner:
Dwi ddim isio gweld ti, ond dwi yn - I don't want to see you, but I am.
Dwi ddim isio i ti fynd, ond ti yn - I don't want you to go, but you are.