I've done a lot of work to answer that question.  Over the years, I've gone through many diskettes, Zip disks, tapes, CDRs, DVDRs, hard drives, and USB devices striving for order and peace of mind.  My four requirements have not been met until now.

1 - I want backup that's automatic.  Once setup, my fingers and my memory play no part.  Set it, forget it!  But I want to be able to check and see it's OK whenever the whim strikes me.
2 - I want to backup everything.  No decisions as to what's important and what's not.  No choices to make.
3 - I want backup that's historical.  If I can't find a file lost today, how about finding it in last the night's backup, or the night before, or the week before, or whenever before it was lost.
4 - I want backup that can survive.  If my laptop is stolen or if my house burns down, I want my backup safe.

So here's what I'm doing, and I recommend you do it too:

->  Use Mozy Home (2 GB free), http://mozy.com/ , for transactional files, like Quicken and Palm Sync.  This satisfies all but requirement #2.  I've been on to this for years.

->  Use a Windows Home Server (that's the operating system) server (that's the box)  http://tinyurl.com/6nlktu.  I can get you one for about $400.  This is a headless (no keyboard, mouse, or screen) computer with only a  power cord and a network cable.  This puts us out of the thumb drive, drive swapping, and disc burning business for good.  If the disaster of a dead drive happens, you can restore everything to new hardware in an hour or two with nothing lost.  This satisfies all requirements short of total house destruction.

So call me to discuss and order.  You'll be glad you did :)