Mine was up and it had broke, but they still fixed it for free(maybe it was my smooth talking on the phone with the costumer service lady..or not ) Point being they would have still fixed it without warrenty anyway.
mainly you can put your game on the HD for faster load up times etc.
I would seriously look at an xbox, I had a PS2 since they first came out...I was persuaded to get an xbox before xmas (was lucky enough to get a crystal one) and have not looked back my PS2 has been gathering dust....there is much more you can do with the xbox hard drive...a lot more pieces of software seem to be being developed....XBMC, you can store and play any type of muisc, pictures, films (dvd, vcd, avi etc), ftp client...so easty transfer of files to your hard drive etc.
Obviously you need the xbox chipped...I got mine chipped with the new X3 chip and I haven't had any problems with xbox live (obviously with the chip off).
than you can rent games and dump images of games on it.
and loading times in turn disappear
There's a usb add-on or something to that extent (can't remember the name of it right now) that allows you to rip games off the cd and store them on the hard drive so, as jimi said, eliminates load times and protects the discs from being scratched. Initially, the only thing the hard drive did was decrease load times for Final Fantasy 11 by storing some content but there was nothing else you could do with it (other than install linux if you could find the kit). It was fairly useless and not worth the $100 or whatever to purchase it along with FF 11. Whether or not it's worth the investment now is more of a personal decision since it's still useless until you buy the addon that lets you actually use it for something other than FF 11 content storage.