I'm pretty sure the MBA isn't meant to be your only computer.
Probably true. But I've outlined a scenario below that can give you up to 320GB storage, plus the ability to back up under a variety of circumstances. With the SSD model this would be potent stuff!
...does one have to buy time capsule in order to back up the MBA. . .
Short answer: NO. Long answer:
i spent a lot of time at MWSF with the apple guys at the MBAir and Time Capsule displays, grilling them on backup strategies (with only one USB port the simplest methods aren't viable on an Air).
They assured me i could back up an Air to a) time capsule using time machine; b) a 3rd party NAS drive connected to a non-apple router, using time machine; c) an NAS drive using superduper or some other backup app; d) an external drive using time machine. And I think they told me i could backup to time capsule's HD using some other backup app, but i won't swear to that.
The problem I have is that with only 64 or 80 GB of storage, an external drive is (for my purposes, at least) going to have to be used just to carry the files I'd normally carry on my MB or MBP. So the real question is, "how do you backup your external drive?" That's not a problem if you have another computer with more typical, more generous port configuration (meaning ANY other mac). If you don't, and have only the Air, it's a challenge: a) b) or c) above would work; d) wouldn't.
And I figure lots of buyers would want to carry the Air back and forth between home and office, or, as in my case, two different home bases. I'm sometimes at one place or the other for more than a month, so I'm going to want to make backups in both places. I was disappointed to hear from the MWSF apple guys that time machine can ONLY back up to a single target (meaning my scheme, to hang an NAS drive or Time Capsule at both my destinations, and use time machine at each place, won't work. I can, however--and this would be my plan--use time capsule at one location with time machine, and use an NAS drive and superduper at the other).
It's not unreasonable for a dramatic new product to force some compromises, and to spawn some creative new solutions.