I was in the Apple store today to let the Genius Bar look at my wife's phone. It wouldn't power up and trying to restore it in iTunes only resulted in an error. I was expecting to have to defend what caused it (I still don't know), but the GB tech didn't even ask. He just ran a few tests, was able to duplicate the error, and said it would be replaced. Luckily, I had 8 days of warranty left and the replacement was free. While I was there, a young lady brought in 5-day-old iPod Touch. It had clearly been dropped and had a cracked screen. She was also given a replacement device free of charge. Maybe Apple finds it better to keep a happy customer who will buy more products in the future than haggle over replacements. Interesting!