I've spent a reasonable amount of time doing forensics at work, so I guess I could put this to rest.
If you overwrite every byte on a harddrive once, you're good for 99.999% of the world. Only the richest and most powerful organizations (US Government, and a few private data-recovery organizations) can recover it. If you overwrite it 3 times, you're safe from probably everybody, except maybe the US Government. If you overwrite it 7 times, you have absolutely nothing to worry about.
If you overwrite every byte, it makes it impossible for any software tool to pick it up. You have to remove the platters and scan the magnetics whozzits of each one to pick up bits and pieces of data. Once it's been overwritten, you'll never get a 100% clean image. No matter what technology you have, physics is against you.
Once it's been overwritten 3 times, each bit is so mucked up that it's basically impossible to detect the magnetic discrepencies of the original data.
The only true solution, of course, is to destroy it.
In the Canadian government, there are 6 data classifications:
Classified, Level 1, Level 2 -- wipe the disk 3 times, then it can be sold or donated
Secret, Top Secret, Level 3 -- disintegrate the disk into pieces that can fit through a 1/4" screen, then recycle them. The recycling is important, because once the plate from the harddrive is built into a house, it's pretty tough to recover it
I had a link to an article on data recovery written by the Canadian DND, but I don't have it now. Oh well