Backups are an "old science"
The answer depends on what sort of disaster you can reasonable axpect, how much the stuff is worth, and how quickly you want to be back up and running afterwards.
Probably the best is still mag tape, after all the years it's been around. You can backup a couple of hundred gigs to a DLT tape cartridge costing £20, using a drive for £500 or so. It backups the whole O/S and applications. If the whole PC is lost, you build a new identical (or similar-hardware) one, install a bare O/S of the same kind, and restore the tape. (Actually some tape drives can fake a bootable CD so you can restore a tape image backup direct to a bare drive).
For lesser disasters e.g. a lost hard drive, I use Trueimage. A super program, does exactly what it says. It takes a snapshop of the whole HD and writes it somewhere else; typically one would write it to a networked hard drive or something like that. You also make a bootable CD with it. If the hard drive goes, you stick a new one in (doesn't have to be the same type or size), boot off the bootable CD which starts a bare copy of Trueimage, and restore the remotely stored image. Works really well too and far simpler than restoring any tape backup because there is no need to install the O/S first.
For stuff which is valuable but a rapid restore is not required e.g. photos, just store them somewhere else. On a CD or DVD (off site) and also on a networked hard drive in you house.
The last option is good enough for most private users.
One trick is knowing
what to backup; with some apps like Outlook it isn't obvious where the data is stored, and the numerous export/import options are poorly documented.
It would be a right cow if you lost a hard drive and then discovered that all your past backups are 90% complete and totally useless - this has been done very very very very often in the most expensive corporate situations
