I had the same concern. If the drive is totally not working, I would not be to worried about it. However, mine was not booting and would state SMART status failed, but it would boot off the SD card I setup when it started acting up. It was making a lot of noise. The drive was readable and I could copy stuff off of it. Thus my concern, because it refused to let me delete anything off it as if it was locked. Even my admin password would not allow me to drag anything to the trash. I managed to erase it with disk utility today though. Now I feel much better about taking it in for the free repair.
I have not received any e-mail from Apple yet and I bought it directly form the Apple store.
I've had two fail on me already, replaced both times under AppleCare - most recently just a few months ago, so I'm in the same boat as the other poster who doesn't know if I needs replacing or not. My guess (based on years of experience with Seagate) is hat if its a Seagate, it'll be toast sooner or later.
In any case, when you're dealing with the Genius, ask them to give you the old HD back to you once they've yanked it and replaced it, and they will. Luckily, they did for me, since my last backup had been months before.
Also, if you use the drive in a USB enclosure afterwards, you might be able to pull data off it and possibly even write to it.