I have the same drive (the Seagate 500GB) and have been using it heavily for about a year with no problems whatsoever. Sorry you have bad luck with yours.
As far as RAID, that's my next step. I'm looking at getting 2 or 4 1TB drives and setting up either a RAID 1, if 2 drives, or a RAID 1+0, if 4. I found this pretty sweet looking
eSATA enclosure on NewEgg that I'm seriously looking at getting. I'll just need to buy an eSATA ExpressCard before I can use it and until I build a new desktop to put that included PCI-E card in.
I've always used Western Digital for internal drives and have never had a problem. The external Seagate was the only the second non-WD drive I've ever bought and I have no complaints. I don't really think there is much of a difference between them. Some people have better luck with one over the other but all in all, it's just that; luck.
My HD setup:
Laptop (primary PC): Came with a Seagate 100GB drive that is split to ~80GB (80.8 usable) C: and ~12GB recovery partition. My laptop had an empty internal bay so I added in a Hitachi 160GB drive (149GB usable).
Desktop: 2 WD 320GB SATA drives. These aren't really being used because I currently have Ubuntu installed and it's a pain in the ass to set up file sharing like Windows does. I also have a couple IDE drives, I think a 40GB and an 80GB but they aren't hooked up right now. I have Suse installed on one of those.
I want RAID because it makes multiple drives act like one. I hate having all my media split across different drives. I got all my TV shows and ISO rips on my external, movies and porn on one of the 320's and my music, pictures, and any current torrents on the 160.
And yeah, I have no backup system in place right now. I can't think about that too much though or I start getting really scared. Another reason I want that RAID setup.