Chris, get yourself a drive that uses RAID. Not sure if you know what that is, but basically if you have 2 x 500GB drives, they are set up in a mirror. What ever you write to the first disk gets written to the 2nd disk. The downside is you only get 500GB from the 2 drives, but if one drive fails, the remaining drive keeps working, you buy another disk to replace the failed disk, pop it in, and the device re-writes the data to the 2nd disk and you once again have peace of mind resiliency.
Backups achieve the same thing but there are manual steps involved. Backups are only better if you have a fire and the backups were kept offsite or in a fireproof safe.
This is an example of what I mean http://reviews.cnet.com/hard-drives/maxtor-onetouch-iii-turbo/4505-3186_7-31593898.html