I'm getting to the stage where I'm worried about losing my files as there's quite a lot to lose. I want to back things up.
man, i got to that stage 8 years ago :-/
personally, i'd say go with an external hard drive. this is what i use at home, and this is one of the backup strategies i use for my IT department at the company i work for. advantages of external hard drives over internal are definately not speed or performance; and they're definately not smaller physical size, etc. but they have one advantage over most other backup media: they're portable, and they're reliable. they don't get scratched, broken, chipped, and you don't have to unscrew your case to get them out.
this is especially important for us, as we frequently have hurricane warnings and floods. when this happens, managers are instructed to each walk by the server room, and grab one of the 1TB hard drives we have, and take them home with them. When hurricane Rita hit, a little less than 2 years ago, we had people evacuate to all parts of the country, and they took the hard drives with them. Should anything happen to me, i reasoned, or any number of managers, the company's data would still be intact.
so yes, i say go with an external hard drive. you can set up daily syncs to it (as i do at home), shoot, with the size they have these days you can copy your entire hard drive to it nightly, via norton ghost or some similar solution