There's been a lot of this apparently. Happened to me, I was using Safari, my MB froze, couldn't force quit, held the power button to shut down & on reboot, got the folder w/ the blinking question mark. There are a couple topics dealing with this, but so far I haven't seen anything saying that anyone has been able to get the drive to work, or to recover any data.
I'd suggest looking at the following thread "MacBook hard drive failure epidemic" (
http://discussions.apple.com/thread.jspa?threadID=960977&start=0&tstart=0) for more background.
I was able to bootup from the install DVD but when I tried to run Disk Utility, it couldn't see my drive. I replaced the HD, put the old one in an enclosure and tried running Data Rescue II, but it couldn't see the drive. Some others weren't even able to get their install DVD back out of the MB. If it's under warranty, Apple will replace the HD but they'll keep the old one, so you have no further chance to recover any data, but so far I haven't seen much success with that anyway. Best of luck, and if you do have any success, please share your technique.