Backups are important, and it's also a good idea to make images of your OS drive and individual OS's in case one shits the bed. It's easier than having to do a complete reinstall of an OS, and all the updates and application reinstalls that go with it.
I've got 4 data drives that back up to 4 backup drives, which back up to 4 external backup drives. I have images of my OS drive as well as individual OS's. I also pull my Firefox bookmarks off my various machines, merge them, and then put them back on the devices so that all of my bookmarks are backed up and current across all devices.
As for your problem hard drive, pull it from the machine, and put it in the freezer in a Ziploc bag for a couple of days. Pull from freezer and with it still in the bag, wrap it in a soft-shelled ice pack and connect to another machine with a SATA/PATA to USB connector. Transfer data. A couple of years back, I had to pull an OS and data off a failing 80Gb hard drive. I got about halfway through before it started throwing errors. Wrapped a new ice pack around the hard drive, the errors stopped, and I was able to copy the rest of the drive. I had some booting issues after copying, but a quick run through with a Windows repair disk, and the new hard drive was up and running in the machine.