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Apple customers who purchased a defective Time Capsule between approximately February 2008 and June 2008 may be eligible for free repair or replacement according to an updated Apple support document.

The defective devices typically do not power on or shut down unexpectedly after starting up.

Details in support document, "Time Capsule: Does not power on"

If the company confirms a Time Capsule is affected, they will repair or replace it free of charge. In addition, customers who previously paid for a repair or replacement related to a faulty 2008 Time Capsule should contact Apple in order to receive a refund.

Discuss in Digital Home's Apple Computing forum
 

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Ironically, I was looking at these this weekend. Still haven't found a great backup solution for my new mac and this would fit the bill perfectly.

I decided against it based on the horrible reviews about the product dying within 18 months. I wonder if this means I can expect the reviews to get better.
 

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From what I heard the biggest beef customers had was Apple was not repairing these units but instead they were replacing them. The hard drive was perfectly good just the power supply died. Some people were not willing to depart with their data on their hard drive so they wanted a repair not a replacement.

Customers that were handy found it easy to replace the power supply themselves.

I wonder if Apple is going to start repairing these units instead of replacing them.
 

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from the page

Note: If you need to retain the data that is on your affected Time Capsule, Apple provides options depending upon where you live.
That suggests a swap to me and maybe a repair if you bitch and complain! A swap is probably cheaper for them since the cost of labour of fixing it would be a significant percentage of the cost of making the unit.
 
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