I've never purchased an extended warranty and nor do I ever plan to. Whilst they aren't necessarily a rip off, many, if not most, are expensive for what they offer. The only advice I give to people is to check the small print first - There are often get out clauses for the manufacturer and you may not be covered for things which you perhaps feel you should be.

Say you purchased a new PC from a store and you were offered a three year extended warranty for roughly a third of the cost of the machine new. Bear in mind that you should also have a standard 12 month manufacturers warranty which covers any faulty parts. By the time you've reached the end of your warranty, it is highly likely that your PC is worth very little these days. Additionally, barring a complete failure, replacing an individual component is almost certainly going to cost less than the warranty, even if you need to take it to a tech. Taking into account the fairly robust nature of components these days, and you are rapidly running out of reasons to take out an extended warranty.

Now, if you're not confident about using a computer and would like to be able to take your PC back from where you bought it if you have a problem, then extended warranty's are a good safety net. They cost a little, but you may feel it's worth it for the peace of mind. However, if you know even a little about PC's, you might just be able to save yourself a bit of cash in the long run which can go towards a brand new PC in two or three years time instead.