I had the exact same experience at an Apple Store two days ago. Brilliant service -- though I do wish they'd think of a better way to deal with a faulty button contact than junking the whole device.

Contrast to my Asus netbook, for which the power adapter pin fell apart after a few weeks' use. I called the support line, who more-or-less accused me of deliberately breaking it myself and said I'd have to send everything back, netbook (with my data on) included, and they'd see whether or not to charge me. Cheap device, cheap service.