I got an iPod Touch for Christmas last year. It started giving me trouble a few months in and things kept getting worse. At first, resetting it would fix the problem, but then I had to restore it a few times, and that wasn't good. Then the USB stopped being recognized and that was the end of my journey.
I was poking around on the Apple site to find out what to do. I didn't feel like making a trip to the Apple store in Pittsburgh, so I opted to mail it in. The process could not have gone more smoothly. First off, I didn't even have to pack it up--I just had to take my service receipt to the UPS store in Richland, which I did on Monday, and they packed it up and sent it overnight to Apple. Apple did their diagnostics, determined that there was indeed a problem with the iPod, and mailed me a new one yesterday. I received it today. I reloaded it with all of my music (and Canabalt) and now it's ready to go. I'm going to be using it a lot in the coming months because it only has a 3 month warranty so I want to make sure everything is working.
I suppose the only way this could have gone better is if I wouldn't have had problems with it in the first place, but it's nice to know that if you do have problems, a quick resolution is in store.