Just to let you know my experience with Hard Drive upgrading.
I too bought a new 160Gb drive (a Maxtor, 7200rpm, 8mb buffer, exact model available if anyone wants it) and fitted it about 5 days ago and it all worked fine for a while. After a day of it being in I had the same problems as the people above with the yellow light and slow/no response to remote or front panel buttons.
I found that if I plugged the unit in without the aerial connected it worked fine - you could play back programmes from the disk, navigate the menus and stuff but just couldn't use the thing for what it was designed for, i.e. recording Freeview broadcasts! As soon as I plugged in the aerial it froze.
I swapped the old drive (original Seagate 40Gb) back in and it worked fine, just as before I took it out.
The next day (Christmas Eve) I took the Maxtor drive back to Novatech and swapped it for a Seagate 160Gb 7200rpm drive with a 2Mb buffer - the model is ST3160021A - cost me £55 (£2 less than the Maxtor).
Fitted it on Christmas Eve and it's worked perfectly to date - no lock-ups, no yellow light, lots of Xmas TV recorded fine and plays back without glitches (in fairness, so did the Maxtor until it died).
It would seem to me that either there is a specific Seagate driver in the DHD4000 (perhaps they only ever tested it on Seagate drives) or that other drives draw too much power from the PSU, thereby knocking out other parts of the circuit. The other possibility is that the box doesn't work properly with the 8Mb buffer drives.
Anyway, I'll keep you posted - problems or not...