Happened to both of my launch consoles within a week of each other, both when just over two years old. One was under Gamecare Warranty and the other not. Called Sony (0870 5998877 or cheaper on 01923 476426) and despite arguing my case they refused to back down on the £99. Did talk them up to a years warranty instead of the usual 3 months right enough so worth digging your heels in for at least that much.
For that £99 they came and collected it, fixed it and returned it within 3 days. Never had a problem since.
The Gamecare one I had to post to Total Console Repair myself, took a week to come back and the "repair" lasted less than a fortnight. Had to post it to them again and they replaced the hard drive as well as the laser this time. Lost a lot of stuff but, touch wood, no hassles since.
If you don't have any warranty best bet is the £99 option, at least the service is first class.