In my experience, yes, they are worth the money.
I picked up a
1 TB IomegaŽ eGo™ Desktop Hard Drive w/ USB 2.0 connectivity down here in the States (on sale @ Fry's last week) for $85. It comes with a USB cable and a power adapter (must be plugged into a regular outlet to function -- cannot power itself through the USB supplied power of the computer it's plugged in to.
Since I couldn't find out very much info about the drive online before buying it, I decided to splurge on Fry's 3-year warranty for $20, which is actually better than most manufacturers' warranty programs in my experience. That came to $105 for a huge drive that looks nice and is guaranteed to work for 3 years (or I get an instant exchange for a brand new same or newer version of the same, whatever is in stock @ Fry's)... not too bad.
It doesn't have crazy great specs in terms of cache, buffer, or access/read/write speeds, but like mykalberta above, I'm only using it to back-up everything I have every week or so in case my computer's internal hard drive fails. If you're looking to do very frequent back-ups, continuous back-ups, or are backing up sensitive or critical data, I'd suggest going with a drive a little more expensive (ie. faster and less likely to fail).
It doesn't really matter what size you get. As far as external hard drives go, they're basically the same as other electronic components - you'll pay a premium for smaller size. If that's important/useful to you (since you only have a laptop, then it might be), then go with the smaller size if you can afford it. I went with a regularly sized external drive and consider it an acceptable size and weight. Nothing too annoying, but certainly not "exceptionally" small. It works for me.
In terms of price... shop around. As you can tell from the deal I got, these things aren't as expensive to make as they want you to think. I'm not sure really sure where you'll find the best prices in Canada, but Costco is known for good prices and a good return policy/warranty program for electronics.