Disclaimer: Flooding in Thailand has, until recently, been driving prices on mechanical Hard Drives stratospherically high. Recent price-checking seems to indicate a downward trajectory, which is nice, but it might still be advisable to postpone a purchase in this are until HDDs reach their pre-flood price levels.
Storage is (or at least was) profoundly un-sexy. For years, mechanical Hard Disk Drives (HDDs) had been the only reasonable consumer option for this kind of storage, and HDDs are old-school tech. That's not to say they haven't been improved over the many, many years they've been around, but at a certain point you just start taking them for granted. However, the relatively recent advent of Solid State Drives (SSDs) using NAND Flash has rather changed that dynamic. SSDs are faster, lighter, smaller, consume less power and are less fragile than mechanical HDDs. Apparently, the only thing they don't do is cook you breakfast, and that's because they already hired someone for that. You're welcome. Unfortunately for the average user, SSDs (and the technology they're based on) are still maturing, and prices are high. They just aren't feasible for many budgets at this point, especially with the current glut of fantastic 1TB HDDs. The following is intended to give you a rundown of some of the recent history of HDDs and SSDs, as well as some of the drives to look for.
Hard Disk Drives
Unless your PC building budget is roughly the same size as the GDP of Latvia, you're going to need at least 1 mechanical HDD, even if you're running an SSD alongside it. Solid State Drives simply haven't yet reached the capacity levels necessary for them to replace a good mechanical hard drive for mass storage. HDDs with eight times the storage capacity of a nice SSD can go for 1/4th the price. Hard drives are good for more than just mass storage, though. Admittedly, no HDD will beat an SSD in speed, but a solid HDD system drive will be more than fast enough for the vast majority of users.
So what should you be looking for in a system drive?
1. Spindle Speed: The RPM rating of a mechanical hard drive is the speed at which the spindle, and thus the platters (the magnetized disks holding data) inside the drive spin. The higher the RPM, the faster the drive. For a system drive you want at least a 7200 RPM drive.
2. Capacity: I'd say at least 500GB. 1TB is often the sweet spot, price-wise. Good 2TB 7200RPM drives do exist, but they're expensive.
3. Cache and Platter size: Most relatively recent 500GB and 1TB HDDs are single platter drives, which is good for performance. I'd say that 16MB of cache is good for a 500GB drive, 32MB is good for 1TB.
4. SATA II: I'm not sure HDDs using legacy interfaces like IDE and SATA I are still available, but if so avoid them. You also don't need SATA III compatibility, as no mechanical HDD can saturate the 3Gb/s link provided by SATA II, much less double that. You don't need to avoid SATA III HDDs, but often the SATA II models are less expensive and perform just as well.
My current favorite system drive HDD is the Samsung Spinpoint F3 1TB. Other good options include the Western Digital Black 1TB drives, the Seagate 7200.12 1TB drives, and the Hitachi 7200 RPM Desktar 1TB drives.
When looking for a storage drive, things are simpler. Spindle speed can be lower (5400-5900 RPM) and higher capacity drive sizes (2TB) are more affordable. I'd look at the Hitachi 5K3000 2TB and the Seagate Barracuda Green 2TB.
Solid State Drives
SSDs are a whole other world. Rather than spinning disks, SSDs utilize solid state memory (most commonly NAND Flash, like the stuff in a USB memory stick, though NOR Flash or DRAM SSDs also exist largely in enterprise environments). Most NAND Flash drives consume significantly less power than mechanical hard drives, and without the need to accommodate platters and head mechanisms, they can be produced in significantly smaller form factors. SSDs are significantly lighter than desktop hard drives, and are entirely silent. Solid State Drives have no moving parts, and are thus significantly less fragile than hard drives. They can sustain shocks and movement while in operation without damage, and (for obvious reasons) do not sustain mechanical wear and tear. Manufacturing defects and poor materials can still result in premature drive death, but a lack of moving parts essentially eliminates mechanical failure. Read/Write speeds are significantly faster than mechanical drives, and random access/seek times and latency are extremely low by comparison to mechanical drives.
There are definite downsides to SSDs as well, though. Unlike mechanical drives, there is often a significant delta between read and write speeds for solid state storage. NAND Flash is also rated for a limited number of write/erase cycles (3,000 for the 20nm NAND used in current-gen SSDs). The Flash may continue to function beyond its rating, but it's only guaranteed to function reliably up to that point. Failure, in whole or in part, could occur on the 3001st cycle, or the 8000th. Current NAND Flash SSDs also experience issues with degradation in write performance over time. TRIM or good garbage collection can do a lot to alleviate these issues, but all overwrites (for instance, saving a new version of a document under the same name as the original, thus overwriting the original) will occur at lower than the rated write speed. These problems result from a disparity in the way NAND Flash writes and erases data.
Perhaps the most persuasive argument against SSDs, though, is the sheer expense associated with owning one, and the exceedingly poor ratio between the cost and capacity. It's expensive to own even a relatively small SSD. One large enough to store your OS and a few critical programs will cost you over $100, and you'll likely need a good 7200 RPM HDD for the rest of your programs anyway. Larger capacities are significantly more expensive.
Nevertheless, if you can afford an SSD, I'd say it's worth it, especially with this new generation of SATA III capable SSDs. If you're looking for a new SSD, there are quite a few options. The price/performance champions are Sandforce (SF-2200) based drives from any number of manufacturers (Intel, OCZ, Corsair, Kingston, and more). These can come in asychronous NAND (OCZ Agility, for example) or synchronous NAND (OCZ Vertex 3, for example) flavors. Synchronous options have performance advantages.
Unfortunately, SF-2200 based drives have reliability issues. The most significant BSOD bug was recently addressed with a firmware fix, but most drives still have some stability issues. The exception to this are Intel's recent 520 series drives (codenamed "Cherryville") which are basically built from the ground up (from NAND selection and physical construction all the way through heavily tested custom firmware) to be eminently reliable as well as fast. From all appearances, Intel has succeeded.
Non-Sandforce options are numerous, and many are quite strong as well. Marvell controllers are used in many good drives, like Intel's 510 series and Crucial's M4. Samsung uses their own controller for the excellent Samsung 830. OCZ uses their own Everest controller in the solid Octane drives.
If I were to be forced to recommend one series of drives for a user who wanted the best compromise between price, reliability and speed, I would go with the Crucial M4. It has good firmware support from Crucial, has proven to be quite reliable, and is plenty zippy.