I used a Time Capsule for ~2 years without any problems. But recently it started overheating a lot, and I decided it was kind of stupid to have the hard drive and the router combined into one integrated unit so that I had to replace both of them if one failed. I replaced the failing TC with a new Airport Extreme and a 2 TB Western Digital hard drive that I already owned, and everything works fine. It was not completely seamless to set up -- I think had to format the hard drive, mount it, then immediately reboot in order to get Time Machine to see it as a mountable backup volume -- but once Time Machine saw it, it works flawlessly.
As long as this works, I don't see any reason to buy a Time Capsule. It's annoying to throw a hard drive in the garbage because your router fails (or vice versa).