For students its a no brainer, I paid £40 for the Apple Care on my 08 MP, the retail is £195I can see its a bigger decision without that discount however as many have said if you are paying that much for a MP it gives peace of mind as well as the fact IF you do have a problem it is likely to pay itself off very quickly.
My advise is however find a nice student get them to buy it for you from the Apple Store and then buy them a pint!
The student price is much cheaper because you get a 3 year warranty for free anyway. I'm not sure what the upgrade pays for but as it is so cheap I'd probably go for it anyway. (I think it buys you extra telephone support and perhaps an engineer on call out instead of having to carry the machine into an Apple store.)