From experience with an iTouch, the cat knocked it off the shelf and it fell only inches but cracked the screen on my son's iTouch. Thankfully everything else works great and the crack is not really in the "viewing" area.
After a lot of research I found out that Apple,
Best Buy replacement policies, etc that no one covers a cracked screen. I was so bummed. I mean the cracking of the screen is pretty much the only reason to get a replacement plan.....anything else breaking would be warranty related.
There are a few websites that discuss replacing the screen and some sites offering to do the procedure, however all that I have researched indicated that these steps only be taken as a last step....meaning if you are willing to sacrafice the whole unit in case it doesn't work.
I have "heard" of stories of people going into the Apple store and getting a sympathetic worker trade out the iPhone, usually with a refurbished one.
I am sorry that this happened because I know who frustrating it is when you have something expense and cool, yet it gets messed up.
Good luck & keep us posted.