Trying it now anyway and if it does work then will make a backup and then the old console will be put away for nostalgia lol

Isn't that fixable?  I'd imagine you could just find someone to send it to, and have them take the system apart and fix it.. And, if you want, for the time being, get a new one, I suppose.

If you are willing to buy a PS3 slim, and regardless of whether you can save the data on your hard drive or not, here is what you do:  

1)  Go ahead and buy a PS3 slim 160GB.

2)  Use the hairdry method to TEMPORARILY fix your 60GB PS3.  This method worked for me, but I had to try it twice.  Check out the video here.

http://www.youtube.com/watch?v=xHMW7XR59Fw

3)  Whichever means you feel most comfortable, transfer your data from your old PS3 to your new PS3.  WARNING:  The data transfer utility only works when there is no corrupt data on your 60GB PS3.  What is considered corrupt, I couldn't tell you.  So, you might want to fall back to backing up on external hard drives or flash drives.  

That should do the trick.  It is easier said than done from my experience.  My original PS3 that I've had since May 2007 went out on me almost a year ago.  Last time I checked, it still works, and I'm going to get it "fixed" as a media server for the bedroom by sending it too one of those PS3 repair services.  So far, I really love my PS3 slim.  The loss in PS2 BC is not that big of a deal, but I do wish I had more USB ports.  I did buy an external USB hub, so all is good.  Good luck man.  Touch base with me later.

EDIT: pezus posted the same vid I used.  Didn't read all the posts before I posted mine. 

This is legit.

so if you back up your whole hard drive you can't take individual save games off it

seems like a waste of time backing up the hard drive

I didn't realise you couldn't put your backed up data onto another PS3. This seems like a stupid idea from Sony and I can't see the reason why they would stop you from doing this. So basically all this backing up I've been doing has been a waste of time. Oh well here's hoping my 60gb ps3 can survive the onslaught of gaming it's going to get when Mass Effect 2 is released in 2 weeks.

Four years is not a bad lifetime for a drive (Blu ray in this case), my 2001 PS2 still works but I play the games from a hard drive since the DVD drive died many years ago.

Well i managed to download all my games and add-ons from the store and need to fax Sony to release my Singstar song data (annoyingly) and going to try the hairdryer trick on my dead PS3 as soon as i get my hands on one lol

Well the YLOD fix worked anyway and PS3 working fine now. Just trying to transfer data from the old 60GB to the new Slim console! Easier said than done but shall manage it lol

yes you will have to reformat as above poster has said. thats the negetive about ps3 HDD