This is a known defect in the iMacs, at least through the first aluminum generation. Every so often the Firewire ports just fail.
The only solution is to pull the power cord for at least 15 seconds. Your drive will mysteriously work again.
You know you're having the problem when Firewire drives immediately spin down after powering up (or don't spin up at all).
Congratulations to Apple for not stepping up and fixing this glaring problem.