Recently I decided to tidy up my image backup system. I have been keeping my main digital images on my internal hard drive and backing up to several USB connected external drives. However I've been running low on internal drive space, plus the backups are being fragmented across multiple drives.
My solution was to buy two external USB 2.0 1TB drives, move all my image files onto the first one (let's call it X:) and to make regular backups of any new or changed files onto the second one (let's call it Y:)
There are a bunch of external USB 2.0 1TB drives out there now for under $100 and you can even find a 1.5TB drive for $100 if you look hard enough!
Installation of USB external drives on a PC is rather simple. You plug them in. That's it. The PC (assuming it has some sort of modern OS) should recognize then, configure them as system drives and assign them a drive letter. I'm using Windows XP and had no issues. I bought two external USB 2.0 1TB Hitachi drives since I found them on special (note: unfortunately that deal is no longer available), but there are lots of other good choices at prices under $100.
I get an average data transfer rate around 30 MB/s, which is typical for a USB 2.0 connection. That means it takes a couple of minutes to transfer 4GB of data. If you really need more speed you can look for an external drive with Firewire 400, Firewire 800 or a SATA interface, but you'll pay for the extra speed and unless you are moving around lots of large files and you simply can't wait, you may not need the extra speed. One situation where you may need speed is when doing a lot of high end pro video editing using multiple video files, then you may need the extra speed that SATA drives can provide.
1 TB (= 1000GB) should be enough space for most people's image collection. It's good for around 40,000 5D MkII images or around 100,000 5D MkII JPEGs. Alternatively, a 1TB drive can store about 50 hrs of HD video from a T2i/7D/5d MkII.
When it comes to backing up the data on a 1TB disk, the only real practical option for most uses is a 2nd 1TB disk. You'd need over 200 single layer DVDs or about 120 dual layer DVDs. Even if you went to blu-ray disks you'd still need 40 single layer disks or 20 dual layer disks. Since a dual layer blank disk sells for around $20 and a blue ray writer for at least $100, you'd be spending $500 or so to back up a $100 (or less) 1TB hard disk. There are professional tape based solution to backing up TB of data, but you don't want to know how much they cost! Hard disks don't last forever, but since you have your files on two disks, it's very unlikely they will both fail at the same time (especially if you have them on different power supplies and even less likely if you disconnect your backup disk when it's not in use). If one fails, just buy another and copy the data from the remaining good drive. So the most cost effective backup for an $85 1TB hard drive is simply a second $85 1TB hard drive.
There are many backup software programs available, but being cheap I chose a free one. I use RichCopy which was written by a Microsoft engineer. It can be downloaded from http://www.softpedia.com/get/System/File-Management/Microsoft-RichCopy.shtml. It's not perfect but it's powerful and it's free. It is a little bit "geeky" (i.e. the documentation is sparse) but once you figure out the options and the interface it's pretty good, fast and reliable. I have it so that it copies from my main drive (X:) to my backup drive(Y:) any file that's either new or has been changed.
Cobian Backup (http://www.cobiansoft.com/cobianbackup.htm is also an excellent and well respected free backup software package. It can be configured to do automatic backups.
You can also find programs that will sync the two drives. The difference between sync and backup is that if you sync the drives and you delete a file from your main drive, that file is also deleted from the backup. Sync drives have exactly the same content, while a backup drive can (though doesn't have to) store every file that was stored on the primary drive, even if was deleted after the primary drive was backed up.
Anything can fail at any time and keeping backups of your digital files is very, very important. There are lots of ways to do this including burning the files to optical media such as DVDs (slow, files can't be easily updated and storage is limited), backing up to an external commercial file storage service (slow, usually not free if you want to store a lot of files) and backing up to drives attached to your PC. Of these, backing up to local external drives is often the easiest solution, but if you have very, very important images I'd also back them up to archival DVDs and store them securely offsite (e.g. in a safe deposit box at a bank - or in a shed at the bottom of your garden) in case of fire, flood or theft.
For the truly paranoid (or extremely cautious) user, the backup drive can be disconnected from the system and powered down when not in use in order to protect it from power like surges and/or lightning strikes.
While you may think it's painful to spend another $200 for drives to store and backup your data, it's nothing to the pain you'd feel if your irreplaceable images were lost due to a disk crash!