Best Buy for some reason is really not advertising this, but it's true I just sold my Iphone and purchased one. It's still running Android 1.6 but it's due for the 2.2 update in a day now.(so they say) Kinda of big but I'll get used to it and for $99 bucks can't really go wrong.
You can get accidental damage insurance from SquareTrade. I just had my keyboard go bad on a laptop and they reimbursed me 100% for the replacement KB (I requested them just reimburse for the parts since I didn't want to wait for a repair).