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A hard drive is the component in your pc that stores all of your data, photo's, mp3's, games, windows and so on. Using a magnetic platter, data is written onto it and stored even when the machine is turned off, which varies from RAM. As a hard drive contains moving parts they are prone to failure after excessive use which can result in loss of data. There are a few data salvage methods but these can often be unreliable so it is paramount to keep a backup of any critical data. Hard drives come in different types such as:
IDE - Typically found in older systems now.
SATA1/2 - Current machines, faster data transfer than IDE.
Solid state drives ( no moving parts ) and Raptor drives run considerably faster than the above mentioned types but they are still expensive and unlikely to be in the average system at this point. SATA and IDE drives are relatively cheap and some manufacturers offer a 3 yr warranty. The maximum size of these drives is increasing all the time.

Cutaway of a standard hard drive, note the disc platter and arm similar to a record player.