Just thought I'd share what's happened to us so you can all avoid it!
Our time capsule just stopped last week, no warning - the power died. Apparently this is a known problem, at, or even before, 18 months old the power connection just fails. Obviously this is out of warranty so we rang Apple to find out that we could take it in for a replacement (which appears to be them acknowledging that this is a familiar problem to them). However - we have used this as a back up and foolishly have all our photos on there - and only there. This includes all the photos from the birth of our children, especially DS1 who was very premature and has a physical disability as a result and he is starting to want to know what happened to him, for which photos would help a lot!
All our data on the TC is ok, we just can't get to it. If we try to get it by breaking the seal then we invalidate the option to replace it. So we are stuck - either no photos or no Time Capsule and no wireless. Apple will not help at all - they get paid for each sealed unit returned...
I know we were stupid not to have our photos anywhere else (although we think we have some on a DVD - we just can't find it) but the TC is sold as a back up and we didn't expect a sudden complete power loss.
So if you have a time capsule, please back up all your stuff elsewhere while you wait for it to fail...