Most things, if not everything, are stored on digital media nowadays. Parts of your life are registered on your hard disks, CD's, and DVD's. But what if one of those fail? Do you have a backup?
Backing up to optical media (like CD and DVD) is cheap, but with cheap also comes questionable quality. Will those files you've backed up two years ago still open? I don't know, and I don't care actually. I back everything up to external drives. A 500GB drives is cheaper than a spindle of DVD's matching the storage capacity, and a harddisk is faster and can be reused if nessecary. Another drawback of DVD's is that they have a relatively small capacity. I would need tons of DVD's just to backup my photos.
Most of my work is being done on my iMac. Attached to my iMac is a Firewire drive configured for Timemachine. This is done for quick and easy access to the average screw-up on my behalf (like deleting a file or directory by mistake).
At least once a week, or after certain events, like shooting a gazillion photos, I make a backup to my local server (which could as well be a network attached storage device, or a USB/FW drive). This backup remains onsite. For real disasters (like the burning down of my house) I have an offsite backup. This backup is made on a small 320GB 2.5inch USB drive (<€100) and runs whenever I think I need to do that. This drive is encrypted with Truecrypt, so if someone steals the disk, they don't have access to my (precious/private) data.
Ideally, you could store drives with a friend or family. Every time you visit you exchange the drive. You do need at least two offsite drives for this to work.
The only thing that can go wrong (in the terms of data loss) is that the house burns down with me in it, while I'm backing up for offsite storage. Well, in that case I don't need the backup since I won't be around needing it ever again...... Or when Murphy visits.
I did think about a real online offsite storage solution (like Amazons S3 service), but the problem is my Internet upload speed. E.g. if I shoot 8GB of photos on one day it take almost two days to upload that to any service. Furthermore, online storage of >100GB of data aint cheap either. So, the offsite disk drive is a relatively simple, easy and cheap solution giving (me) a good backup strategy.