iPods come with 1-year hardware and 90-day telephone support.
The hardware covers "manufacturing defects". You need to read the terms and conditions in the documetation you received with the unit to know the full coverage limitations. If you drop the unit and crack the screen, you pay for an "out-of-warranty" replacement. If you drop it in water, you pay for the replacement. If the unit simply "fails" without damage from you, the unit will be replaced under warranty -- but be warned that Apple-techs have pretty much seen it all and know what is or is not accidental damage.
AppleCare extends that from 1 year to 2 years.
90-day telephone support will be extended to 2 years under AppleCare. And telephone calls cost you $40 or so if no warranty is in effect.