I've seen these symptoms a few times before, and as everyone has said, it's bad news - your hard drive is well past its sell buy date. It will work for a while, but sooner or later you will get a catastrophic failure - like inexplicable error messages from Windows/*nix when you boot your PC. As rcgreen said, once you run out of spare sectors, it's time to back up your data and buy a new hard drive.
In reply to k41d3r07h, even setting fire to your hard drive doesn't always work - in fact there are some companies that specialise in recovering data from PCs that have been almost destroyed in a fire (it is magnetic data, and it is surprising how much data survives).