What is the most reliable external hard drive?

At the beginning of the month I almost lost everything on my computer. So I am now looking for an external hard drive to back everything up. So that never happens again. I'm just scared to get one that is not reliable.

There is no such animal, but you can have some control by DIY.
Basic Backup
Get an external drive at least equal in size to the internal hard drive and make (and maintain) a bootable clone/backup. You can make a bootable clone using the Restore option of Disk Utility. You can also make and maintain clones with good backup software. My personal recommendations are (order is not significant):
Carbon Copy Cloner
Data Backup
Deja Vu
SuperDuper!
Synk Pro
Tri-Backup
Visit The XLab FAQs and read the FAQ on backup and restore.  Also read How to Back Up and Restore Your Files.
Although you can buy a complete external drive system, you can also put one together if you are so inclined.  It's relatively easy and only requires a Phillips head screwdriver (typically.)  You can purchase hard drives separately.  This gives you an opportunity to shop for the best prices on a hard drive of your choice.  Reliable brands include Seagate, Hitachi, Western Digital, Toshiba, and Fujitsu.  You can find reviews and benchmarks on many drives at Storage Review.
Enclosures for FireWire and USB are readily available.  You can find only FireWire enclosures, only USB enclosures, and enclosures that feature multiple ports.  I would stress getting enclosures that use the Oxford chipsets especially for Firewire drives (911, 921, 922, for example.)  You can find enclosures at places such as;
Cool Drives
OWC
WiebeTech
Firewire Direct
California Drives
NewEgg
All you need do is remove a case cover, mount the hard drive in the enclosure and connect the cables, then re-attach the case cover.  Usually the only tool required is a small or medium Phillips screwdriver.
At least if you buy a drive you can choose to purchase one with a good warranty. Enterprise level drives are more expensive but carry 5 year warranties such as a Seagate 7200 RPM Barracuda. Likewise, you can spend a little extra on a high quality case such as those made by WiebeTech. Slightly different components if you are going for a portable drive in which case using a Mercury enclosure from OWC with a Seagate Momentus drive.

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    1. Do I need to disconnect it (pull out the cable from my iMac) every time I Shutdown - and reconnect on Startup? Or can I leave it it and pretty much just forget about it?
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    2. Can I turn it 'on' and 'off' any number of times (using the on/off switch on the back) when working on the iMac? I might like to switch it off if I'm not using it for an extended period of time while still working on the computer. Is this okay?
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    No: I see no problem in leaving it plugged in to the mains: the 'off' switch disconnects it anyway.
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    I've never heard this, and I can't see that there's any neccesity: the repairing process will be confined to the disk you have nominated to work on in any case.

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    There is one quite anoying problem here:
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    You can't view any of the files on the iPod while using the iPod. You can only see them through the computer. I guess if you want, you can put the files into the "Notes" folder on the iPod and see them using your iPod, but you can only open .txt files up to 4kb big.
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