I think GameStop offers a somewhat better offer, giving you a replacement even if it's your fault the console was damaged.
And yeah, the buyback program does sound like a ripoff in general; if it applied to movies or video games, it might be worth something, but, looking at the web page for the buyback program, it seems to me that most covered products aren't the kinds of things you'd normally want to return after six months.
I've sometimes seen people say that they need concrete simple examples of ideas like expected utility and Bayes' theorem. So, continuing in the same vein as An Abortion Dialogue and Case Study: Melatonin, I recently polished up my shorter-but-hopefully-still-interesting article on Console Insurance.
It's basically a short discussion of how back of the envelop estimates show console insurance (and by extension, most warranty extensions) to be a bad investment.