So far I am still with my original 250 GB drive, as it still has 186 GB free and is working perfectly. I did replace the 30 GB drive in my iBook with a 120 GB drive from Western Digital, and it has worked perfectly without issue. If I had it to do over again, I would have put in a bigger drive. I gave the iBook to my dearly beloved, and it is now rapidly filling up with music files.
The 640GB drive should work, but some people have had some issues with it. You might want to look over this thread:
http://discussions.apple.com/thread.jspa?threadID=2250690&start=0&tstart=0
You can get a 500 GB from Apple Palace:
http://www.applepalace.com/apple-mac/index.asp
It doesn't say what brand the 500 GB drive is--there may be several--but these are supposed to be exactly what Apple uses, and the sticker on the drive would have the Apple logo on it. They seem to want a premium for these drives, and I'm not sure it would be worth the extra cost as others have successfully installed both the Seagate Momentus (WITHOUT the G-Force protection) and the 500 GB Scorpio Blue, which you can find at OWC and Newegg. I don't really know of any problems with those.
I don't know if the problems with the WD 640 GB are intrinsic to the drive or might represent a manufacturing flaw in some of the drives. It may be worth contacting WD to see if they can shed any light on the issue.
Good luck!