Youch. I've just suffered the same harsh fate (the remedy to which lies outside my current budget parameters), which bespeaks some genuine quality control issues.
Less than a year and a half after splurging and deciding to take the Apple plunge (20" iMac), after only mild use in a controlled home environment, my computer suddenly would not boot yesterday. The prognosis from my Genius Bar appointment today: A bad logic board, which they offered to fix for $700, which I cannot afford right now. I also could get a wonderfully nice PC laptop for that price.
Yes, I of course now wish I had scraped together the additional $170 for the AppleCare extended warranty. But the main board shouldn't be going bad after 17 months.
And even after having been burned on my first Mac purchase, paying to fix the problem won't make me any safer against the same fate: I asked whether, after paying to install a new logic board, I also could pay to have it warranted for an extended period, to avoid a repeat of this crisis. To my surprise, the answer was "no": It would be warranted for only 90 days after installation, and there is no extended warranty option. I asked what would happen if the new board went bad a year and a day after installation, and was told I would need to buy a third.
Yes, I liked the Mac experience while it was working, but the overall cost and durability issues have me reconsidering the entire cost/benefit calculus. I definitely am going to wave our IT department away from purchasing Macs for our next Committee upgrade, unless our budget increases significantly.