Initial computer froze with the ball cursor, now it wont turn on

It started last night while skyping, the computer suddenly froze, and the screen would go black before it came back on. After that whenever I used it it would continually go into a non responsive mode, where the application I had open would not respond. I could start new applications if desired, but only to see them freeze up as well.
I decided to do nothing about until today - having done a forced turn off last night. It started and worked relatively well for 2-3 minutes, then it froze up again. I tried restarting it, but now it never goes past the screen with the apple logo and the rotating circle.
Any help would be greatly appreciated.

Welcome to Apple Discussions!
Have you heard of Data rescue II? If your drive will spin up at all, you may be able to salvage at least some of your data. I have never used it myself, but I understand that you can download a demo for free and see if you can see your files. If you can, then you can buy the full version and access them. If your Mac won't boot up, you could try placing the hard drive in an external enclosure. If you have access to another Mac, you could try FireWire Target Disk Mode and see if you can see the drive or the files:
http://support.apple.com/kb/HT1661
If you get the drive replaced under warranty, you won't get the drive back. So you should try to rescue the data before sending it in. If you have access to an Apple Store, the genius bar could probably help with this.
In the future, you might want to supplement your Time Machine with a bootable clone. There are two utilities you can use for this:
http://www.shirt-pocket.com/SuperDuper/SuperDuperDescription.html
http://www.bombich.com/software/ccc.html
You can download either one and try it out for free. If you want to unlock some of Super Duper's more useful features, you can register a copy for $28. CCC is donation ware.
It never hurts to have redundant backup.
Good luck!

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