I don't see any particular advantage to the BestBuy extended warranty other than it being a bit less expensive. With AppleCare, Apple generally will replace a defective iPod (they almost never repair in the store for any warranty issue, they just swap out the iPod), so the BestBuy warranty wouldn't be an advantage there. And I can't imagine trying to get a repair/replacement through BestBuy would be any more convenient than dropping into an Apple Store, if there's one in your area. Plus AppleCare gives you two years of telephone support directly from Apple. The Geek Squad, even if they provide extended telephone support (the contract doesn't say that I can see), may not know diddly about an iPod touch.
I'd go with AppleCare if it were me. It's been my choice for all of the Apple products I've purchased over the years, for myself or the organizations I've worked for, and I've never had cause to regret it.
