Failing HD

OK, I have a MBP with a dying hard drive. The precise model is the late 2008 one. Besides the repeated and persistent delays with any HD-related operation and wrong reporting of avaliable free HD room (it dropped suddenly by 10 GB to increase again by itself to previous levels without any significant change in what is stored inside), there is also Techtool reporting that the disk failed to pass the drive hardware test. So it is definitely something hardware related.

(1) Before buying a new drive: could a loose cable/connection give all these problems?

(2) Do you have any recommendations about a new hard drive? As of now the MBP has a 250 GB one at 7200 rpm (BTO) but my local stores do not seem to offer anything similar. Can this model use an SSD?

(3) What about reliability? For example among the 5400 and 7200 rpm laptop models, is there any consensus today?

Thanks!

In the meantime, I did the obvious: I opened the MBP and I took out the hard drive to check the connector. There was dust around, especially under the battery, which I cleaned of course. I pressed the connector to be sure it is firmly in place, but there were no signs that it went loose. Anyway, I placed everything back and now it seems to work normally, no beach ball galore anymore. The system is fluid again. The drive hardware test of Techtool now passes without errors. What all this mean? Could it be some mechanical part that went into its place after this?

I spoke too soon. It took only a few minutes of use before the MBP starting to behave erratically (and failing again the drive hardware test). So the initial questions still hold.

Finally I installed a new hard drive at 7200 rpm, after having cloned on it the content of the MBP. Beach ball was soon back, so it seems that either this is not a hardware problem or, if it is, it goes beyond the hard drive.

I tried to clean the Mac OS X installation with Onyx (caches and everything). It gave me a couple of hours of peace before the beach ball coming back again. Each time this happens I have free memory of the order of 1 or 2 GB and one swap file of 64 MB, so it is not like the system is swapping out.

Any ideas at this point? Should I try to re-install everything from scratch and, with this opportunity, go for Snow Leopard?