My external hard drive is a 100 Gig Western Digital, bought when that was a big one (years ago). I've never had a problem with it. I am amazed that two brand-name external hdds have failed for the same person. I guess anything can happen.
Just copying your files to DVD or even a CD is not a bad idea. Windows and other companies offer back-up procedures which use file compression, so you could get a lot on even a CD. I'm not sure, but I think Ghost will write to a CD/DVD. If so, you could avoid the cost of an external hdd. Might be worth looking into. I bring up Ghost again since it will completely restore your hard drive, avoiding the tedious procedure of reinstalling and resetting everything.
Editted to add:
I had a brain fade in the post above. It's important to keep in mind:
A CD will hold about 650 Megs of data
A DVD will hold roughly 5 to 7 Gigs
An external hard drive that holds 250 Gigs can be purchased for under $100, per an above post.
That's a lot of storage.
Thus a CD may not be sufficient to back up your files and your operating system, even with compression.
Certainly it can't hold much of your 40 Gig hard drive without compression, unless you don't have much on it. To a lesser degree, the same reasoning holds for a DVD. Of course, you could use a lot of CDs or DVDs (IIRC, Ghost can store an image over several CDs/DVDs), but it gets a bit cumbersom.
It is probably just a lot simpler to go with the external hard drive.