After replacing my Desire Z via FutureShop warranty (for battery issues) I somehow ended up with the lines on my screen Christmas eve, however the LCD was not cracked. The lines would move around and change in brightness as I did things on the phone (opening apps, flipping keyboard out, etc). If the lines don't move then it's more likely a crack in the screen. My issue was more likely a faulty ribbon/connection. I carry my phone in an inner breast pocket on my winter jacket, so I definitely didn't crush it or anything, either.
So back to FutureShop I went, only a week after the first replacement, and they gave me another new one right away. Between 2 stores that I have visited my 2 replacements are supposedly the only 2 replacements that have been done since the phone launched.
My 3rd one seems to be doing well, no battery issues, so far no screen issues.
I guess my point is, if you can get a phone from a retailer that offers a decent warranty, do it. I bought my phone outright at $500, the warranty was $10 a month.. I fell for it, but I'm very very glad that I did. Although HTC may have covered me, I would have been without the phone for a lot of time, and once they found out that I'd unlocked it they probably would have left me in the cold.