I use an Iomega external HD.....320 gig I think (Getting old, cant remember stuff anymore).
I have photos, my skins backed up, all sorts of crap I use that I dont want to lose. I work on photos in photoshop on the drive and it performs as quickly as my internal HD does. Easy to organize files etc, and I have left that thing on overnight when I fell asleep after flying with some of you guys (its all your fault). It was kinda hot, but it still functioned, so it's not that delicate. I don't think it's good form to leave it on all night, but I have worked for several hrs in it with no problems.
I would also do a backup of photos on DVDs. They are slow to work with, but make a great storage back up to the back up. The advantage of the external HD is that you can work with stuff on it in a timely manner.