Now that you're preparing to buy your new iPhone 5, iPod Touch, or even iPod there is one question that you should ask yourself, do I get the AppleCare along with the device? It is a good question to ask. There are reasons to get AppleCare as well as reasons to not get AppleCare. Let's go through them. Today we'll focus on iPods and iPhones.
Before we dive into whether or not you should purchase AppleCare let us look at what exactly AppleCare is. AppleCare is Apple's extended warranty program for its products. With the purchase of any new Apple product you automatically receive one year of hardware support with your purchase. Along with the one year hardware support, you also receive 90 days of phone support. This applies to iPods and iPhones. This may vary depending on local laws, but this is the standard warranty.
AppleCare covers the following items: On the hardware side iPod or iPhone, the battery, headphones and USB cable. On the software side of things AppleCare covers Using iOS and iCloud (iPod Touch), Syncing with iTunes, Apple-branded Apps, FaceTime and HD Video recording (iPod Touch) and connecting to Wifi Networks.
With the release of the iPhone 4S, there is a slightly modified version of AppleCare, it's called AppleCare+. AppleCare+ carries the same things as the standard AppleCare, but with a few enhancements. AppleCare+ also covers accidental damage, with a deductible. This can be quite useful for an iPhone 4 or iPhone 4S with their glass.
The standard practice is that a user must purchase AppleCare before their hardware warranty expires. Purchasing an AppleCare agreement will extend both the hardware warranty, and software support, to two years from the original purchase date.
Reasons to Purchase AppleCare
There are a few arguments for the purchase of AppleCare. The first reason is peace of mind. The price of Peace of Mind cannot really have a monetary value assigned to the device. Knowing that you can bring your device into a store, or send it via mail, and receive a fixed product can be a big sigh of relief when you absolutely rely on a product for your work.
The second reason is that AppleCare can come in handy. Sometimes after you've been trying to figure out a problem, like your iPhone not syncing Wirelessly, and none of the google searches are finding the solution and Apple Discussions' forums does not offer a solution, you have a place to call into to try and get an answer.
The third reason is that AppleCare is transferable. When you purchase AppleCare you are able to transfer the AppleCare to another person or another device. For instance, if you purchase an iPhone today and in six months you want to sell, or give, the device to somebody else, you can sell the device to that person and transfer the remaining AppleCare coverage to that user. This can be an added bonus that can drive up the value of an iOS device.
Reason to not purchase AppleCare
It's too expensive. Some users feel as though Apple's AppleCare is too expensive to purchase. There are some situations where it may seem as though AppleCare is too expensive, such as the iPod Shuffle. The iPod Shuffle AppleCare costs $39 for an extra year. But the iPod Shuffle is only $49. So in this case it may not be the best course of action to get AppleCare.
Some think that AppleCare is not really worth the value. There are those in the population that believe as though AppleCare does not really provide any true value. Given that most of Apple's hardware does not break that often, there is no reason to get AppleCare. AppleCare doesn't cover things like accidentally dropping your device in water, except for the iPad and iPhone with AppleCare+.
The last reason to not purchase AppleCare is due to the upgrade cycle. While it is not the case with every product, many products receive upgrades every year. The iPad and iPhone have received yearly upgrades since their releases. The iPod touch also received the same upgrade cycle, excluding the lack of an upgrade in 2011. The white iPod Touch was released in October 2011, but there was no hardware upgrade. With almost yearly upgrades, if you are going to sell your old device, why bother with the AppleCare since it already has a year warranty.
These are just some reasons to purchase, and reasons to not purchase AppleCare. Personally, I have purchased AppleCare on any portable device, iPhone, iPads, and iPods. I did not purchase AppleCare on my iPhone 4S because by the time I realized that it had to be purchased within 30 days, it was too late. I always purchase AppleCare on my Macs as well. There was one case where I was glad that I did get AppleCare, otherwise I would have had to pay $1300 in repairs. Which usually means, “buy a new mac”. It's just a few things to think about while you order your iPhone 5.

Yes. It’s been my experience that the first model of any Apple device is going to have some problems. The standard warranty will cover the first issue by exchanging it for another REV. A model. The second year exchange will get you that REV. B model. Trust me. I took my iPad 2 back twice before they got it right.