Twice I've fallen for squaretrade, thinking it's the same thing as "the extra protection plan" they try to sell you at big-box hardware stores, or the late Radio Shack. And twice I've been burned, even though both times it was a simple out-of-warranty failure, and not me doing something stupid like dropping it. And although my squaretrade plan didn't cover accidental damage, it was my impression both times that the plan did cover accidental damage, and it was only by reading carefully through all the fine print in every imaginable context that it could be interpreted otherwise.
I would go even as far as to say that it's not just annoying, but fraudulent.. that they are advertising a product that they won't deliver. On Amazon, squaretrade plans ring up like items, which means they get product pages and customer reviews just like the products they cover. Read a few and see how unpopular they are.
I've been able to claim coverage once with squaretrade, on a piece of furniture. For those kinds of items I'd consider them in the future... but not with electronics.
If I felt like it was the kind of thing where you could keep getting new ones by gaming the system I'd say sure, I'll buy a squaretrade plan on a diode... I have 1000 diodes and one of them could conceivably be defective... but like you said they often cost more than the item itself and there can be no gaming the system if they never pay out.
