Yea it would seem your hard drive has died based one your description, however i would not give up on using other methods (Linux tools, command line + others ) of trying to get any stuff you need off of it and making sure it is in fact a hard drive problem .
There is no way to fix it if it is in fact a failed drive. (fixing the drive).
If you want to make sure beyond all doubt i guess you could take it to an apple store for an appointment, they should be able to tell you fairly easily if your hard drive is bad and you do not want to diagnose the problem.
As far as a replacement drive goes I have been using western digital scorpio black drives for a long time, in my personal machines as well..... their warranty/RMA is excellent..... 5 years for the black model line. i haven't had a problem yet in the computers i own..... their blue line is good too if a higher performance drive isn't needed......
WD has a model line now with AF (advanced format) 4k sectors which allows for more storage space after formatting.... and OSX supports this.
Seagate i don't esp like, thats just me,
Hitachi makes some nice drives too.
i would get a WD black or blue 500GB from their Advanced format model line....... my MBP has a 250GB black drive from western digital.