Keef, whether you want or need shadow copying can be judged upon how you do your backups.
Background:
When you open a file for read/write access a lock will be placed on that file to indicate that it is in use, Windows as an operating system will enforce the lock on that file so other applications will not be able to do "dirty" reads and writes. Typically modern applications running on windows will only lock the file for the duration of the write process so it can seem pretty flexible in most respects but this is entirely a development decision and requires extra work.
On other operating systems such as Unix/Linux the situation is reversed in that you can request a lock on the file (or indeed portion of a file on some OS's) and perform your write but it is down to the application and not the operating system to observe the locks in place. This is quite useful as you can cat a text file as it is being written to (e.g. a log file) to monitor its progress in real time (on windows it would not be able to open the log file till its shut).
Shadow copy attempts to get around this and was designed with 24/7 servers in mind for backups. What the service does is mirror portions of the file system so that realtime snapshots can be taken by the OS and a full backup can be performed even whilst a file is open.
So if you close everything of use before you do a backup then it is not an issue to have shadow copy turned off - if like me you leave your computer running 24/7 shadow copy can be useful to ensure even open documents are backed up so long as your backup software is shadow copy aware.
If you wish to reconfigure your shadow copy capabilities you can run a dos prompt in administrative mode and use the vssadmin console application.
Cheers
Jof
p.s. wikipedia has a good page on this:-
Shadow Copy - Wikipedia, the free encyclopedia