For about the past two years I've used TrueCrypt to encrypt my entire hard drive. During this time I've had a complete hard drive failure (data unrecoverable, had to RMA the drive) twice. I've never really had a problem with this before. I was wondering if there is any chance that the increased hard disk activity associated with constant encrypting/decrypting might cause a hard drive to fail
According to TomsHardware
We found that TrueCrypt had a performance impact on several benchmarks, but the impact is not noticeable if you work with popular desktop applications, in a reasonable manner, using a single encryption algorithm.
It seems reasonable to infer from this that the IO overhead is not ten times normal, is not twice normal but probably much less than that. On that basis I would not expect a hard drive to fail much earlier than without truecrypt.
Higher use leads to a higher wear down. Plain and simple, however you might just have had bad luck with that HDD, they can fail pretty much at random, that's the reason why you always need a backup.
We are using TrueCrypt on 10+ HDDs for 5+ years and haven't noticed any significant failure rate deviation (there was 1 failed HDD during this time).