I, like Nick, use a robust backup and copy protocol to ensure I do not lose everything in a primary HD crash.
I might lose what I am doing for no more than a day's worth or possibly a week. My primary drives onboard are two 150gig Raptor drives. The one is loaded with XP Pro, the other with FSX. I also have onboard a 500gig IDE drive partitioned three ways to receive backups of both the Raptors as well as it stores my music, movies and such for onboard access.
On my desk is a 500gig MyBook that I use drive-to-drive copy to copy the onboard IDE drive. This drive is only turned on Saturday night to do its thing. Do not sit running all the time. Should increase the longevity of this drive considerably.
Another 500gig MyBook is stored away in my fire resistant gun safe along with the guns and other personal items. I use drive-to-drive to copy the onboard IDE drive once a month.
Additionally, USB sticks are used to backup very critical files such as associated with my trucking business and the wife's vending business. Triple redundancy.
When Vista or whatever gets a bit less problematic and the hardware improves to the point its worth it I will go over to a system using RAID to provide for both speed and redundancy. As things stand now, my system of backup and restoring has worked for me.
To close, backup and redundancy are very much a matter of finding an effective strategy that meets one's needs and budget. Then sticking with it. And one must always remember that all this hardware is still MACHINERY! Machinery breaks. Just ask any farmer. Or pilot!
And I turn the soapbox to someone else...