Is it Easy?

Using the Mac Migration Assistant it's very easy if you're going from machine-to-machine. If you're just upgrading the OS you'll be doing an archive and install, which is the default and is easy going.

 

I think the install took me 30-40 minutes. I already had a backup on a Time Capsule...but honestly I have never backed-up before doing any System installs on Macs and I have owned them since System 7. Mac software updates are generally no-brainers. The only time to hesitate is the day of a new system release perhaps...and MAJOR upgrades to older processors as the new software generally bogs things down (but not with Snow Leopard honestly)

Snow Leopard seems a lot speedier to me, and has some neat Dock functionality and expose/spaces type windows management is quite cool...never used it before.

Best function added for me is Wake on Wireless as I stream my iTunes catalog to my AppleTV and this allow my imac to finally sleep instead of being on 24/7.

It is extremely easy and painless.

 

With an iMac you purchased new back in September? I don't think you will have any app/program issues. It's not that major an update honestly. Any programs you are worried about? All my Apple programs still work (iLife and iWork)

Really no other way to back up...maybe some online 'cloud' sources but those cost money as would a HD. A new external will set you back under $100. Time Machine makes it easy in your current system software to set this up as well.

I would suck it up and just do it. You can't beat the price! As I have said...I have NEVER lost any data when performing a Mac system software upgrade from the mid-90s to today.

I can't promise nothing will happen certainly, but Apple does a great job with system software upgrades. It's all pretty simple and doesn't affect data, just core system files. Even all of your previous preferences and the like will remain intact.

 

Here is a Snow Leopard compatibility wiki. Note that it is four pages long. I recommend that you search this for anything that you use often.

Pretty much the same story here with updates. I've updated from 7.0-7.1 on a IIvx, 8.1-8.5-8.6-9.1 on a beige G3, and 10.1-10.5 and all versions in between on five separate Macs and have never had any problems with data loss. It normally takes an hour tops, but SL is supposed to be even faster than previous versions.

Also, your iMac should be new enough to get SL from the Up to Date program for $10 shipped if you act before the cutoff on December 26th.