Answers to your questions:
They pretty much cost the same everywhere, so just get it from the Apple store and don't worry about clueless salespeople, long shipping times, or shady credit card charges.
The "extended warranty" is a great idea, but only if you are talking about Applecare. Dont bother with anything else. Also don't buy an applecare contract at the apple store, you can get them on ebay for significantly less money, and they work just the same (all you need is the serial to register applecare with, and they can be used for any applicable device). You have a year to get your applecare contract after you buy it, if you let the original warranty expire without registering for applecare, you lose eligibility for it.
Yes, the screens are fragile. Not as bad as the 2g iPhones though (ask me how I know). Get a case for it. Hard cases offer more protection. I really like the Griffin Elan on my iphone, if something like that is available for the touch I'd recommend it. The best prices I have seen on name brand iphone/ipod cases are at overstock.com, oddly enough.
I wouldn't bother with used, you want to make sure you have warranty support, and most importantly retain eligibility for applecare. Apple refurbs can be great deals (My Macbook Pro has been perfect and cost me less than a new Macbook), but make sure you are getting the device you want and not an older version that won't work as well for you.
Good luck!