Disk Utility can't repair Macintosh HD. What should I do?

Question

Here is a "quick" synopsis of what has happened thus far:
About one month ago, my computer started getting very sluggish (ie, it would take forever to startup, would always freeze after sleep, etc.)  I lived with it for about two weeks, since it would always run quickly after waiting ~30 minutes after starting/waking up.  Eventually, this grew old.  I browsed the internet and did multiple suggested fixes (reset PRAM, run Disk Utility, ran in Safe Boot Mode, etc.).  Nothing seemed to work.  I opted to zero out the harddrive and reinstall Mountain Lion after making a backup.  That was about two weeks ago.
Everything worked fine, up until yesterday.  Once again, things started getting slow.  I decided to shut down my computer for the night and would check it in the morning.  When I turned it on this morning, it wouldn't startup correctly.  I could login, etc., but it was frozen and I couldn't open any applications without getting the spinning beach ball.  I waited about an hour, but it was still slow/loading.  I shut the computer down and booted it in Verbose Mode.  I ran the various commands to check the conditions of my disk, but when I ran the "fsck -fy" command, I got an "I/O Error."  I then tried rebooting my Mac, but it would get to the gray screen with the apple logo and the spinning wheel, and then the progress bar would appear.  Before the progress bar did anything, it would shut itself down.
I then started the computer up and directly went to OS X Utilities.  I went into Disk Utility and tried to check permissions and repair the disk.  Only this time, Macintosh HD was grayed out and seemed to be unmounted.  I couldn't get it to mount.  I went into the Apple Store to have them run their own diagnostics.  However, the apple store employee was unable to get the test working, so that was basically a bust.  At this point, the computer still didn't turn on.
I got home and, just for kicks, held the "N" key while booting up my computer.  For whatever reason, my computer started up (though it took a long time and there was a progress bar).  Now, I made another backup of my disk and am wondering what to do.  I ran Disk Utility again to repair my disk, but it says that Macintosh HD is not able to be repaired.  When I checked permissions, there were tons of Input/Output Errors.  Based on my research, it would appear that I have two solutions.
I can either purchase DiskWarrior and use that to try and solve my problem, or I could just get a new hard drive (and I would upgrade to a SSD or SSHD).  DW is about $50 if I just download it, and the hard drive would cost me $150 or so.  Since I don't know exactly what is wrong with the disk, I don't know if DW would be able to fix it.  That being said, if the hard drive isn't the problem, there would be no reason for me to purchase a new one.  I guess I would just like some advice, as to what you would do.  I apologize for the long post.
TL;DR: Disk Utility can't repair Macintosh HD.  Should I get DiskWarrior or a new harddrive?
Thanks in advanced!

Answer 1

Most importantly, youve already backed up all the data.  All else is cake.
A new HD would cost you only $20 more than disk warrior,....theres no reason to repair a worthless crippled HD, .....new HD 1TB is $70.
Once you back up all the data on a failing HD, further diagnosis has no meaning,....not anymore.
Grab a 1TB  or 750GB  Toshiba/Hitachi (both used by Apple inside their Macbook Pro nonRetina,...both are made by Hitachi)  5400RPM SATA HD.
Forget the repair,.......repair only serves to bring a HD to a point of BACKUP.....since youve already done that, its now just wall art or trashbin fodder.
These are the same HD used by Apple in their Macbooks
http://www.amazon.com/MQ01ABD-2-5-Internal-Hard-Drive/dp/B0077CV2RO/ref=sr_1_1?i e=UTF8&qid=1376281905&sr=8-1&keywords=toshiba+1tb+2.5%22
In the future ALWAYS remember to have 2 backups for everything.  2 backups is 1, and 1 is none.
That way when something crashes (and they all do).....its no worries.