Will Apple replace my iPod Touch?

My screen is really dark... I think the backlight died or something. Everything still "works", but I can't really see anything on the screen unless I put it under a really bright light.
I think it's water damage (everything was fine before I left it in the bathroom, so I think my little brother might have been playing with it while/after he took a shower or something), BUT I checked the "water indicator" thing in my headphone jack and it's completely white.

I have about 2 months left on my warranty, and if they only check the indicator strip... that means they will replace it, right?

 

actually the reason I posted the question was to avoid going all the way to the apple store and have them say they can't help.

if they replace it, will they give me the newest generation? I'm thinking they don't have boxes of the older iPod touch 3G's lying around..