Your post= not always right! :)
I totally disagree with your post!
First I will explain why I use external hard drives on my computer. I have a quad 2.5GHz powermac (Just got it, with 8gb of RAM it flies!). Inside I have two 500GB SATA drives, which is just abou the max I can fit (physically) in this computer. I use one drive for applications and usual stuff. The second drive is reserved for a Photoshop CS2 scratch disk and photo storage. This may seem like overkill until you realize that with a Nikon D2x it is usual to return from an even with 8-10GB of photos or much more from a full day of shooting. These images end up around 1GB each once they have been double processed and recombined with lots of layers and finally upsized to 30x40 @300DPI. So, basically I have a 2/3rds full computer, just from this crazy stuff. This is fine for now, but I have the eternal problem: BACKUPS!
I could use CDs, but it would need nearly 1000 to backup my computer. I could use DVDs but it would take around 140. I could use DL DVDs, but it would still take about 75. This makes any optical media a totally non-viable backup method, since the cost would be more than a new external hard drive every time and I would need a ton of closet space.
Now, to some extent I agree with your point about the unreliability of hard drives- I have had several of them fail (though far fewer than scratched "archival" DVDs). So, I bought a two and a half terabyte (2500GB) RAID SATA II external enclosure from Lacie. I have had great experiances with their pro equipment in the past, and this followed that legacy. I have it set up as a RAID array with more than 1000GBs of redundant storage space. This means that even if one of the extremely reliable drives were to fail I can simply pop another one in ($300) and it reconstructs the fail-safe in a matter of hours.
The speed of this system is at least equivalent to that of my internal drives (perhaps faster, since it is connected through PCI-Express with a tremendously fast interface). And add to that, that the system is extremely secure.
My only issue is if I were to have a catastrophe like a flood all my stuff would be lost. I am considering adding a network attached storage system that would be enclosed in a secure location, but after this buying spree I am flat broke.
In conclusion, external drives have a clear purpose.