Feline,
Thanks for describing your backup system, a useful read. I like the use of memory sticks for alternate days. Whatever works for you is good, and you clearly have a system that works, is simple and not (too) time-consuming.
Regarding the partitions - yes I know what you mean about space, and the one thing that would help is to note that the "My Documents" and other personal stuff can all be re-directed to a different disk or partition, thereby preventing the default C drive location getting to full.
My personal preference has always been for physically separate disks for System and Data - a C (system) drive of at least 40 GB (for XP) and a Data disk as big as the PC / my wallet can accommodate!
SD
ps - regarding incrementals, I often thought that the other kind of (non-complete) backup should be called excremental, but apparently its actually called differential. I wonder why!