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Interesting idea. I'd want to send you a disk with my data already on it and ideally a pair (would consider renting 2 instances for this...). That said as I'm not in the U.S, wouldn't want the drives that far away...
You're paying monthly fees to rent the disk and if you want it shipped to you, you have to pay the full retail price of the disk? That makes no sense to me. It should indeed be a "pay-to-rent" subscription, rent the desk for x amount of months and get the disk shipped to you for an appropriate percentage of the new price, the disk is used and the warranty probably expired, why would someone pay the full price for it? I'd be better of buying a brand new disk at the local hardware store and move all the files from the hosted disk to my local new one.
I think the monthly fee mostly just covers the hosting costs. I think the hard drive angle is his way of differentiating his service from his competition, to win over more customers. I think it's a pretty good model. I would definitely do it, although I do have some ideas too.
So, to @Damian : Namely, I'd want to be able to ship a hard drive to you, and pay you the handling charges. Ideally, I would want there to be a couple of different options in terms of drive size. Also maybe allowing to mount two drives on the same server, this way maybe I can ship you a drive, pay your handling fee to mount a drive, and then ship the previous one back to me, paying the handling fee. Hence I'd be cycling two drives, however since you'd be making the same amount in terms of handling fee anyway, you have nothing to lose in that scenario, and I don't have to purchase a new HD every single time. Something to think about. If you do this, I would sign up yesterday.
Shipping your own drive is a whole new can of worms. It's colocation then, not just hosting. Might get complex... for instance some states charge property tax for colocation. Also what happens if the drive you shipped fails? Who is responsible for replacing it?
Those are details that can be figured out/negotiated. I'm sure OP has a legal team that can figure all of that out. I'm sure there's a way to get around the colocation issues.
And as for the drive failure issue, I don't really have an answer. I'd figure whatever policy the market would support.
I'd be in +1