I know nothing about walmart's warranty plans so I dunno about your situation. However, IMO MS's Sevice Contract (technically it's not a warranty) has pluses and some major cons. The big cons IMO, being you get a used/repaired system back that has had previous problems, instead a fresh new one. Their support is sub-par, as others pointed out they don't even get you all the paperwork you need. Actually the only plus about it is it's unlimited repairs during those two years and most of the time you need only send back what needs fixing.
Personally I actually go with in-store warranties for several reasons:
1) You get a brand new system. This is huge for revisions/redesigns to consoles. Take the new processors that will go into the 360s starting next year. Mine doesn't even really need to be broke, but I can still take it into the store and get a 360 with a cooler, quieted processor if I want to.
2) Many stores will pay you back the full price of what you payed for the console. So when the price drops to $330 sometime you still get your $400 back and don't lose $70 in the process.
3) With some instore plans you don't have to ship anything and wait for a period of time before getting a new one. They, at least IMo are typically less hassle than dealing with the manufactuer.
Now of course in-store plans have downsides as well... Like not having any in-stock, being one-time only deals, etc, etc. But to me they are less hassle and greater reward.