Do you normally run OS X or OS 9 on it?
On my iBook I normally run OS X, I booted into OS 9 it hung, I restarted and like you I got the flashing startup disk icon. I booted up using a Norton rescue CD and I nearly freaked out when a message came up telling me the HD was unreadable and did I want to erase it! HOWEVER and bizarely booting up with the OS X CD showed nothing at all wrong, the HD showed up fine in disk first aid and no probs were found, running permissions made no diff either. SO I just did an upgrade of Jag keeping my files and prefs intact and its been all fine since then. Strangely however the Norton CD still doesn't load my HD, it simply says its unreadable and needs to be erased, I'd like to know why it says that when it is actually fine. Even more stranger is that the CD had always booted the iBook fine up to that point...
hope that helps
cheers ry