Applecare doesn't cover you dropping your iPod or water damage. Keep your iPod in a good case and it should last.
Also if you are playing a sport that you might get hit or fall, no brainer, take your iPod out of your pocket. I fell on my 5G iPod playing football and gave it a huge dent and cracked the cover. (It still worked and I just replaced the cases myself)
It can take alot of wear and even abuse, but everything has a breaking point. Don't push it too far. The classic is likely the most sturdy, and definately better than the G1 and G2 nanos (they would fall from 3 feet and be toast)