I have discussed the topic of when to backup your computer with lots of folks, most of whom never back up at all.  I also talk to people who use their computers as an electronic typewriter and rarely save a document after emailing or printing it.
 
I don't understand these people.  Having an archive of what I have sent and received is one of the most useful parts of computers for me.
 
My personal backup philosophy has evolved over time, but it definitely got a boost when my laptop's hard drive crashed.  Fortunately, I was about 98% backed up.
 
What I do now is a weekly incremental backup from my laptop to a hard drive on an old desktop computer.  I use Backup4All.  It saves the backup as a zip file, so I know I will be able to read it later even if I can't get to my backup program.  It can backup files that are un use on your system.  Backup4All periodically does a full backup with incrementals inbetween, and seems to work just fine.  The biggest problem is that I have to remember to turn on my old desktop on Saturday nights, since that is where the backups go.  If it isn't on, there is no backup.
 
That problem may go away shortly.  I just ordered two 500GB external USB drives.  I ordered Seagate FreeAgent Desktop drives.  After reading a lot of reviews, they seemed to have fewer problems, and have a 5 year warranty.  I hope my experience is good.  I'll let you know.
 
I have been doing image backups monthly of my laptop hard drive.  After my last crash, it took me a week or so to get everything reloaded.  In some ways, it was good in that I got up to date on software, but that was the hard way to do this.  I use Image For Windows for making the image copies.  I can restore using Image for DOS which boots from a CD.
 
i plan to use one external drive for a month of backups, and then take it to the safe deposit box for offsite storage and rotate my drives.  That way, I will have the latest full backup offsite, and it will be a LOT faster to make the backup to a hard disk rather than to 10-12 DVD's!
 
Maybe I will do incrementals more often, too.