upgrading Family 5 3gs to 4s, Apple care?

[Microman]

OK, the five of us have 3GS. Friend of family that has a phone job, says we can get 100-109 for our 3GS trade in, so for about 145-150 per person , and a 2 year contract we can get the 4S.

Not sure about the $18 charge for activation.

But now I have questions about Applecare, or Applecare plus, that I read about here.

If we do nothing but buy the phone, doesnt it come with a 1 year Apple Warrantee, that we can call the Genius Bar and have it fixed if there is a problem?

THen cant we extend that warantee a year by buying an extension, before the first one runs out?

Friend, sales guy, is saying Applecare is good for $69.99

Thanks.