Buying AppleCare/Extended warranties are a personal preference I think.
I've never bought extended warranties for any electrical/electronic equipment I've bought. Like what MK2007 said, none of my gadgets have encountered problems after the initial 12/24 month warranty.
Funnily enough though, I have had to take back 2 iPods due to HD failure. One was a 4G iPod photo, and more recently a 5.5G iPod, but both these were within the 12 month warranty. A couple of weeks ago, the replaced iPod photo was 'dying'. I bought a replacement battery, and fitted myself. It now seems healthy.
My point is, if you don't want to risk paying over the odds to get something fixed in the future, then go for the extended warranties. I on the other hand, would much prefer to save that money, and fix it (if I can) or put it towards a replacement when the time comes, as by that time, it's probably due to be replaced anyway.