Since you already tried to reset your PRAM and SMC, I can advise you to try booting to Lion Recovery (use cmd + R on start up). This will let you know if the machine is operating fine hardware and storage wise. If you can boot into your recovery HD with no issues - not only do you know the problem is isolated to the boot volume, but you have Disk Utility and an internet browser to run tests and see what step is next.
More and more Macs are getting updates to run Internet Recovery. Once you have your mac booted, you can then know where the problem lies. Worst case, with a current backup, you could just erase your Mac HD volume and reinstall Lion.
There are a few opions:
- If the HDD is not recognized, you need a hardware repair.
- If the HDD is recognized but the Mac HD is not, you will need to create a new partition and reinstall.
- If the Mac HD is recognized, repair disk and restart to test; if the issue persists, reinstall.
If you don't get what I described here, please say so and I'll extend my answer. But you can start with that.
It seems like Apple has made a support page concerning this issue. I hope this can help you!