Blinking Folder at startup!>!

So I just woke up from a nap 10 minutes ago, went to my computer, and clicked on the ichat icon. it froze, which was weird, but really thought nothing of it. so, i went to force shut down the computer (holding down the power botton for a few seconds). i restarted it, then there was a blank white screen for about 4 mins, which came to a blinking folder with a question mark!! what is this??

Tried re-setting the PRAM, i think thats the correct wording, but nothing happened.

Put in my mac installation disk, went through the whole thing, up until select destination and there was nothing. So, I went to Utilities, and disk utility, no hard drive is to be found! Looks like my H.D crapped out after 2 years. Thank god I have apple care and backed up everything on my external.

 

the only 2 options for the start up disk would be:

1) from the install disk

2) the network startup

Nothing of "Nikki's HD" or similar

 

yeah. already made an appointment for wed. 26th in the morning.

the next big question, how do i get my install disk out?