I have never had a good experience with 
S.M.A.R.T. (Self-Monitoring, Analysis, and Reporting Technology).  It usually only reports the drive is about to fail after the drive has already failed and is completely unreadable.  My latest drive failure is yet another case of this, but interesting in that this failure seems to have been quite easily predictable.  The drive was obviously failing from the output of the S.M.A.R.T. monitoring system, with 197 new defects, and over 50 uncorrected errors.  Yet the software in the drive still reports 
SMART Health Status: OK.
            
Device: SEAGATE  ST336607LW       Version: 0007
Serial number: XXXXXXXXXXXXXXXXX
Device type: disk
Transport protocol: Parallel SCSI (SPI-4)
Local Time is: Thu Feb  1 21:25:04 2007 EST
Device supports SMART and is Enabled
Temperature Warning Enabled
SMART Health Status: OK
Current Drive Temperature:     28 C
Drive Trip Temperature:        68 C
Elements in grown defect list: 197
Vendor (Seagate) cache information
  Blocks sent to initiator = 183468359
  Blocks received from initiator = 3071358557
  Blocks read from cache and sent to initiator = 53688899
  Number of read and write commands whose size <= segment size = 918209810
  Number of read and write commands whose size > segment size = 319145
Vendor (Seagate/Hitachi) factory information
  number of hours powered up = 18768.45
  number of minutes until next internal SMART test = 102
Error counter log:
           Errors Corrected by           Total   Correction     Gigabytes    Total
               ECC          rereads/    errors   algorithm      processed    uncorrected
           fast | delayed   rewrites  corrected  invocations   [10^9 bytes]  errors
read:      62105       40         6     62151      73380        661.309          56
write:         0        0        31        31       2263        224.643          55
Non-medium error count:      302
SMART Self-test log
Num  Test              Status                 segment  LifeTime  LBA_first_err [SK ASC ASQ]
     Description                              number   (hours)
# 1  Background long   Completed, segment failed   -   18716                 - [0x4 0x3e 0x3]
# 2  Background long   Completed, segment failed   -   18716                 - [-   -    -]
# 3  Background short  Completed                   -       0                 - [-   -    -]
# 4  Background short  Completed                   -       0                 - [-   -    -]
Long (extended) Self Test duration: 768 seconds [12.8 minutes]
The S.M.A.R.T. system was useful in showing that the drive hardware, and not any components at a higher level were failing, but as this demonstrates, never trust the S.M.A.R.T. health status itself.  Look into the details and verify your data.