Clyde has got it, you can buy an enclosure (an empty external hard drive) for 20 - 40 bucks for simple ones from best buy, comp usa etc.
Putting the drive in is easy, a few screws and 2 connections that are keyed and only go in one way, pretty easy. If you have any remotely techy friends they can so this in a matter of minutes, heck anyone with a screwdriver that can read can do it in a few minutes.
Hard drives fail, its a fact of life, the multi year warranty carried by the internal wont get your data back but it will get you a new drive. Also the price savings can be great, especially if you get a deal on the drive via the weekly sale price plus rebate from Best Buy or Compusa or Staples.
The fire box is my own obsessive compulsive mentality coming out, the thought of losing one MP3 or precious picture scares me to death :-) Either way drives fail, so a backup of the drive is key, a few hundred GB's of data lost no matter what it is would be a hugh pain in the ass.
However you decide to do it I cant stress having some backup, my favorite is to buy in pairs(pre made externals, make your own externals or one internal and one external)
The only other backup options are to burn CD/s (146 CDs per 100GB), DVD's (22 per 100GB) or a tape device which will cost in upwards of 2000 for something that can backup a few hundred GB on one 50+$ tape.
Therea are 250GB drives on sale at Comp USa this week for 59$, a pair of these and a pair of enclosures would set you back about 180$ for 500GB of external storage (250 data and 250 for backup) of backup storage. This particular drive only has a 1 year warranty but the cost savings is HUGE
These may be small for your needs, they just
happen to be on sale this week, the sale drives from CompUSA, bestbuy, staples etc are sweet bargains (assuming the rebate shows up) and are a great way to get a lot of storage for cheap.
http://www.salescircular.com/ is a great site for comparing the weekly specials for computer stuff for the local retail stores.