On what? The Zune?
We're talking about hardware abuse. From these forums you have probably seen all the people that talk about Apple giving them a new phone for something that the user obviously did. Why should they be getting new phones or iPods or whatever? It's not included in the warranty.
Apple shouldn't have to pay for the stupidity of a user. You break your device at no fault of Apple, then you are SOL. The only issues come from when they blame obvious defects on unrelated damages, but we'll have to see where this goes.
I think it's a good idea. It'll put less strain on Apple to replace unwarranted damages and allow them to operate at a lower cost. Who knows, maybe we'll see a drop in costs.

Doubtful, but a man's gotta dream!