Given that the parts on this thing don't total more than $200 some odd dollars, I would venture to say it'd almost be the same (if not cheaper) to just buy a new screen should you drop and crack yours than buy an extended warranty.
As far as regular defects, I think the manufacturer's warranty should be sufficient. I have plenty of Apple stores nearby (living in Chicago) so it shouldn't be hard to get it replaced or fixed on the spot.
By running some numbers on extended warranties on Best Buy's site, it looks like a 2 year plan that would cover accidental damage will run around 30-35% of the cost of the unit.
So paying $150-$175 for 2 year coverage is just insane, especially since the thing has no more than $200 worth of parts in it. I bet it would be significantly cheaper to just get a screen or battery or whatever other part you need and put it in yourself (there are plenty of online guides how to do that stuff for Apple products).
The added bonus of this approach is that if nothing goes wrong, the money stays in your pocket until you need it, where as with the warranty you MUST spend it and if you don't use it, you still lose it.
From my experience in selling stuff on ebay/Craigslist, having an extended warranty does not significantly boost the resale value either (even though in theory it should), so you don't win out there either.