So far I have been using 3.5" WD hard disks since 2003 and have never had any fail or develop bad sectors. I have three in current use - 2 x WD Caviar Blue 640GB's and 1 x 2TB RE4-GP RAID edition.
I bought a 1TB Hitachi 3.5" Hitachi shortly after its launch and while it never gave me any data issues in my PC, it was the hottest running hard disk I've owned. When I later upgraded to a 2TB HDD, I could not use this 1TB in an external enclosure due to how hot it would get. Sure enough when I tried selling it off second hand, the person returned it to me a week later after burning his hand when trying to use it in his external HDD enclosure! I sold it off again and haven't heard from the 2nd buyer since.
As far as reliability goes on 2.5" HDDs, I have seen more WD Scorpio failures than with HD Travelstar and more failures from both than Seagate, Samsung or Toshiba over the past two years. Both WD and Hitachi seem to fail in a similar way, where the HDD beings to perform slower than usual in the days leading up to the failure and then totally fails where very little, if anything can be recovered. Samsung and Seagate on the other hand tend to fail with an accumulation of bad sectors, so when these drives fail, it is usually possible to recover nearly all the data. I had the same experience with Maxtor before Seagate gobbled them up.
On the other hand, it will be sad to see Western Digital to go, as fewer manufacturers means less competition, especially since it will take quite a long time before SSDs catch up with HDDs on pricing per Gigabyte to use them for bulk storage.