A non-booting system that shows some signs of life (booting at least to the spinning-gear screen) shouldn't have its hard drive written off so quickly... that's like saying you should replace your entire wheel on your car because of a flat tire.
Unless there are other symptoms of catastrophic, physical hard drive failure (not booting whatsoever, a mechanical clicking sound coming from the computer, etc.), I would not be suspect that the hard drive itself is unusable or non-functioning.
Repairing the hard drive may or may not help -- if it does, great! If it doesn't, that's still no reason to suspect at this point that the hard drive is dead. If you cannot reformat and reinstall OS X, then it would be prudent to suspect that the hard drive is dead... but since hard drives cost money, you should exhaust all other "free" avenues before shelling out money.
There are many other possibilities that could be causing your system not to boot, one of them being a borked or damaged OS X install. Before you go spend money on a new hard drive, you should try a reinstall of OS X.