People got to stop blaming disk drives first thing when disks don't work because it only makes people waste time, effort and money in fixing/acquiring disk drives.
Diskettes are bit rotting like crazy. I don't have a single disk that works. I have 4 disk drives to test them with, all working, and they don't work in any of them. Every time I get disks with a computer or else, they don't work.
SPS people said it in their site:
I made the mistake to buy more disk drives because disks weren't working and everyone was suggesting I had a "faulty disk drive". I wasted a lot of money in the process.
I bought computers with allegedly faulty disk drives, only to find out all the disks the seller tested the machine with were the culprit. ALL of them, in the hundreds.
Buying a disk as "tested" means nothing nowadays, I can test a disk today and tomorrow it might have errors. Disc block errors are probably media problems rather than disk drive problems.
In brief: make 101% sure your disks are not crap before you go out and buy a new disk drive. It would be a waste of money. Seeing as your drive reads some disks, I would say it's OK or maybe a little dirty. Disk drives either work or not work, they don't usually work partially.
Buy yourself a hard drive, memory and maybe an accelerator, as Arnie suggests, and play games off hard drive using WHDLoad. Forget about floppy disks forever.
(I don't think you need more than 1MB for putting images to disk. RAM isn't used, the image will be stored in CF and written directly to floppy)