The 160GB iPod classic is still the currently sold model, so if it happens to be less than one year from purchase date, it is under warranty.
This web page has info about Apple's service.
http://support.apple.com/kb/index?page=servicefaq&geo=United_States&product=ipod
Depending on where you live, there may be local non-Apple repair shops. However, the combination of costs for the parts and labor may make it uneconomical.
If you are good at such things, this web site has DIY repair guides.
http://www.ifixit.com/Device/iPod_Classic
One interesting way to replace the hard drive is to use a standard compact flash card on an adapter. This web page has good info
http://alan.lamielle.net/2010/01/22/ipod-classic-compact-flash-upgrade
You won't get 160GB, but a 64GB CF card is reasonably priced these days. I have an older 4th gen iPod with a CF card inside, and there are some cool benefits. No more hard drive spin-up delays. The battery lasts longer on a charge. The iPod is probably much more resistant to shock (because no moving parts). The CF card plus adapter is noticeably lighter than the hard drive.