has anyone used the service where apple send you packaging and you have to send your ipod back to get fixed?? what happens and how long does it take?

Yes, I bought an iPod touch that had a faulty home button. I called Apple Service and they told me that they someone from Fedex would come to collect the iPod touch. I still had the small brown box which contained my iPod touch, so I just put the device and boxing into this box, wrapped it up and when Fedex came, I just gave it to them. It took about two days to send it to Apple, as they contact you to confirm that they received the iPod and are handling the problem. After a day or so, they'll call you back again to tell you whether you are eligible for a new iPod or certain after services. Then, you'll receive your iPod in about a day or two.

So the basic timeline:
All days are business days

- Call Apple Service
(2 Days for Fedex to come, I called on Friday, so they came on Tuesday)
(1 Day for Apple to confirm they received the iPod)
(1 Day for Apple to tell about their resolution)
(2 Days for the iPod to come back)