The Sony warranty is 90 days for labor and one year for parts.
I've had mine for six months, and nothing has gone wrong at all. It seems pretty robust and well made.
From reading all the posts here, there have been a few problems, a few with the screen, a bad battery or so, but seemingly not too many things have gone wrong.
Those who have had to send the Reader in for warranty report, as far as I can recall, pretty hefty labor charges.
Extended warranties are a dilemma. I steer clear of them myself, and "Consumer Reports" has for years advised against them for most things. As the Reader is new however, and the labor warranty is so short, it might be wise to get one. Like any insurance, it's great if you need it but you may feel remorse if you never do.
I dropped mine from a table to a carpeted floor once, once it slid off my car seat to the floor in a sudden braking situation, and once I actually sat on the thing when it was in an easy chair. None of these things hurt it (knock on wood).