They weren't giving away instantly "free" iPods. You still had to pay the $200 upfront for the iPod, which is still a lot of money when students should've been using that for applecare. Then you had to wait a few weeks for apple to send you a rebate check, on top of that wait a few days for the check to clear at you bank. If you hate the headphones? flip them for profit, no waiting for your money to return to you..
For AppleCare? You mean were mad at students for not paying extra money for an extended warranty? Students are certainly not going to be doing that.