You are kidding right?
First System Restore doesn't let you easily select a file and restore it. As another poster said, it stores it's Restore Points on your system drive. Can you even restore a single file with System Restore? I have never in my life successfully used System Restore for anything useful.
As for having to keep your HDD plugged in, you don't. Time Machine will still keep track of all the changes, then when you choose to plug in the HDD again, it'll back them all up.
The safest backup plan for any system is backups to another disk that is not your main system disk. It's even preferable to have backups go to an external drive, not just another internal drive.
-Kevin
I thought system restore only backs up "system files," anyway? System Restore has saved me many a time on windows xp - i think that says more about the crapiness of xp than the greatness of system restore. When my volume icon or power icon disappears off the taskbar, or windows starts decided i have to log in even though I have only one account, or windows starts drawing the wrong icons for things, or windows starts blue screening for now apparent reason, i find that system restore often helps. And sometimes not. And if there's a way to use it to restore data files and such, I've never seen it.