I work for Tivo Inc at a call center as a customer service/retention representative. This means that I take the calls that come in about cancellations. The first thing that any retention representative or supervisor will tell you is that it states in the Terms & Conditions of service (that you have to agree to to even have service at all) that the Product lifetime service does not transfer to an upgraded unit. That means that if you purchase a replacement tivo at a 3rd party retailer (ex. Best Buy, Amazon.com) or from Tivo.com, your PLS (Product Lifetime Service) will not transfer. The reason it won't transfer when purchased from tivo.com is because all units come with service on them. Only retention and tech support agents can send out a stand-alone unit that the service would be able to be transfered to.
However, it does transfer if something within the tivo has broken and is replaced through the Tech support department. They basically will do some troubleshooting to find out what the issue is. If there IS a problem with the tivo itself that can't be fixed with some simple steps, they will instruct you to send it in, at which point a replacement unit is sent back. When the replacement unit arrives (and the rep should tell you this) DO NOT ACTIVATE SERVICE ONLINE. When you call in to have the service activated, make sure to tell them that it was a tivo exchanged through tech support.
The PLS really is a great plan. It does save you money in the long run if you actually follow the correct procedures and listen to the advice that many reps are more than willing to give. It so much a great deal that having multiple tivos will actually give you a reduced pricing for it... Check out http://www.tivo.com/policies to see the terms and conditions in full if there's anything else that seems unfair.