I have bought and received as gifts several Palms. Mostly the Zire's (the 71, 72, and 72 special edition).
I love using them. However, two of mine had issues. The Zire 71 had some internal problems and it never worked reliably, and sometimes the battery would die within minutes, even though it was fully charged.
The second one, the Zire 72, was good for a few months, and then the screen scratched (my fault). Then I started getting weird glitches, like the programs wouldn't run, or it would appear as a program malfunction. Drove me nuts, because it would always happen during a time I really needed the info and I didn't have any other references. Usually it was for a drug I didn't know, or the doc was wanting me to tell him the available dosages, or the side effects/contraindications.
So I ended up getting a new Zire as a present for my birthday from the doc who uses it most often...LOL
However, I have not used it in a while because I haven't been working. I use mine for work only, and I truly enjoy it for all the programs I invested in over the years. I had a Tabers, the nursing constellation from Skyscape, two drug guides, a NCLEX review, the nursing notes, and a bunch of other things. I used it all the time, and others would ask me to look up things as well.
I didn't have a warranty on any of my palms, but I was told that my issues wouldn't have been covered when I DID go to circuit city to have it checked. I figured for the models I had, it wasn't worth purchasing the 100+ dollar warranty just to cover a 200 dollar item! I figured I would upgrade every 2 years or so anyway, so it wasn't worth it for me.
Now, if I had bought the 500 dollar Life Drive, I may have well purchased the warranty, but I haven't bought one yet!!! It depends on your income too...if you're having a lot of bills/debt I would probably buy the warranty if you could afford it. If you could afford to cover a new one fairly easily, I probably wouldn't buy one, but that's just my own opinion.
Oh, and I always purchased a good case, usually a hard one to cushion it when it dropped. And it did drop a few times, even being careful. I always put it in my deep pocket on my leg, but if I had to run for a code or something, it would sometimes fall out, and the case really protected it.