Yes, you may have lost all the work on that drive. I/O device error messages are not a good sign.
First thing: do not panic. Second thing: do not panic. Do NOT reformat the drive.
Try the drive on another computer. Try a different cable, if you have one; if you don't, try to get another cable (buy or borrow one). Try another device in the same port on the computer.
Sometime you can recover data even from a broken hard drive. There are professional data recovery companies who do this. Beware: they can be VERY expensive - you have to need the data back very badly, They may not succeed, or they may only get some of the data back, or only pieces.
Think about what's on the hard drive. How much is it worth to you? $10? $100? $1000? More? Know the answer to this question before you take the drive to a data recovery company - if it's worth less than $100 to you, then don't bother.
Take this as a lesson, too. Make sure you have copies of all your important files. The old rule of thumb is that if you don't have three copies, then you don't have any. Get into the habit of making and keeping backups. For anything important, keep a copy off-site - if your house burns down, will you lose every copy?