IIRC the blocks are rounded, so two 192KB files, reported as 2 blocks each, will only take 384KB storage, reported as 3 blocks. (Could be wrong, but I have personally noticed inconsistencies with block sizes.)
About 1 in 20 hard drives fail? Interesting (though I wonder the time frame in which they were measured). A solid state drive would be the best option for optimal reliability, but I can't imagine them going with it due to cost issues. Therefore, I really do think that if they license something, it'll be a real hard drive, especially since PS3/360 have internal drives, and drive failure doesn't appear to be a huge problem for them.