I use a flash drive as one of my backup methods. I also archive important stuff to DVD's, and external hard drives. Another option is online backups. I have my own web host so I put stuff up there as well. An online backup is attractive because even if your house burns down, your files will still be there.
I use Acronis TrueImage home 11.0 for system backups (I dislike their later versions) but maybe someone else can chime in on good backup software, I'm kinda out of the loop on this stuff lately (same about good online backup solutions).
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