Apple new iPod Touch 8gb 3rd gen. or refurbished?

My current iPod (over a year old, 8gb 2nd gen) is fritzing so I want to replace it. I've been thinking of getting the refurbished 3rd gen. 8gb from apple at 169 instead of new for 199. The impression I'm getting is that because they test it extensively and replace any malfuncting parts it's basically as good as a brand-new iPod, but of course they can't sell it as such since it technically isn't. Am I right in this umption? And they back it for a year at least, so I guess if something does go wrong I can get it fixed. Either way, should I get the Applecare extended warranty thing? I think it's like 30 bucks for an extra year (two total). Is that worth it? Thanks ^^