This is an incredibly subjective issue. Your iPhone comes with the basic AppleCare coverage - a 1 year warranty against manufacturing defects. The warranty includes 90 days of phone support (call Apple for assistance with issues/questions).
The AppleCare+ (PLUS) coverage extends the coverage (including the telephone support) for a full 2 years, and also covers accidental damage (breakage, water damage, etc) for $99. The catch is that typically, an "in warranty" replacement due to physical damage (breakage, water damage, etc) for $269. The AppleCare+ will allow you to replace your device TWICE in the coverage period for $79 per incident.
AppleCare+ is typically purchased at the same time that the device is purchased, however Apple will allow you to buy it within the first 30 days. If you do buy it after the fact, they may require a physical inspection of your device before activating the coverage and/or may require you to activate a remote diagnostic report on the phone as well.
Neither plan covers loss/theft of your device.
So the question becomes one of "how clumsy are you?" If you tend to be accident prone and drop your phone a lot, it may be a good investment for you. It means that for $260 ($99 + $79 + $79), you can replace your phone twice for about the standard charge of replacing your phone once. If you buy it and never use it, then you have wasted the $99 price of the coverage...
Bottom line: Some buy it, some don?t. How accident prone are you?