If you reckon there's a reasonable chance of it going tits up in the next 12 months then I'd say it's probably worth replacing. I had a similar dilemma about 10-12 months ago, when my 360 was struggling - didn't want to fork out for a replacement if the next gen is only a year or so away (there were rumours at the time that the 720 would be announced at the 2012 E3 and possibly up for sale Dec 2012). Definitely glad I did it, and now don't have the frustration and the worry every time I turn the machine on. And as Kieron mentioned - it's not completely money down the hole, as you'll recoup some if you sell/trade the old one, and you'll recoup more if you sell/trade the new one in a year or two, when the ps4 arrives.
The ps3 slim is coming down a bit more, now the superslim's been announced.
160gb version bundled with fifa 13 for £185.Of course, 160gb ain't much of a step up from 120gb. (How do you fill 120gb? Surely you could easily free up about half of that by having a bit of a clean up?)
You'd need to weigh up the pros and cons between slim and superslim, really. (Apparently the new one's noisier, because the disk drive is under just a flimsy piece of thin plastic, thanks to that horrible top-loading design. Loud enough that it's a problem though?)