Good info EMT. I always recommend data backup. I personally take all important files and use portable hard drives to back up the information.
Dont use physical media like CDs or DVDs as they degrade over time, and cause create cyclic redundancy check errors.
I also do not recommend cloud storage. I personally have accounts with sugarsync, dropbox. box.net, and some others. The issue with them, though, is that their terms and conditions permits them to access your files to check them to make sure you are not backing up anything illegal like child porn or ripped movies. While those things are not my concern for myself, it bothers me that some stranger can be reading through my backed up documents, pictures of my kids, etc. I may have boring stuff backed up like home movies, but I want privacy in what I back up. If the privacy issue isnt a concern for you, then absolutely use cloud service, just be sure to check all the details of the group you use. I personally still use them for other things, like trading files or other things, but many times I try to use my own FTP server.
If you have the money then I recommend buying flash based backup drives, and using them in Raid or other redundant formats. External drives are the best, and keeping backed up drives in a secure location is recommended. This way if your house catches on fire and your computer burns up, your backup drives will be locked up in a fireproof safe or in a different location away from the fire and the data will be safe.
Thats my two cents. Just keep in mind that no backup method of 100% secure and issue proof. So having plan B and plan C is the best way to go. Personally, if I had the money I would buy multiple backup hard drives. Have one set used as primary backup, and then a secured second backup that synced with the primary backup and stored in a different remote location.