I was told I have to fill out that warrenty paper that came in the iPod box, but there nothing to fill out
Correct. There is nothing to fill out.
then I was told to go online and do it.
Go here ->
https://register.apple.com/cgi-bin/WebObjects/GlobaliReg.woa
Can't I just call them when it breaks
If the purchase is registered, Apple will know when the warranty begins and ends.
If you wait until you need help, you may have send in proof of purchase.
I always thought the manufacuring warrenty didnt cover much, just like if it was a defective iPod,
Yes, this is true.
If it stops working, you can get it repaired/replaced.
and that the best buy or other stores, that their's were much better and covered everything??
Everything? Not by far.
Extended warranties are simply free money to the store. If it breaks, Best Buy does not pay a dime to repair or replace the item.
They get to keep 1/3 of the price and the rest goes to the actual insurance company, who pays to repair or replace items.
Too many horror stories of people who have gotten ripped off because they were told the extended warranties did not cover it.