Right now, I keep my iTunes library and a copy of all my documents on a 150GB external. I have about 50GB left of space. But most of my iTunes crap are tv shows rather than music, because I just buy what I hear and like on the radio.
But isn't a back up of the operating system itself I get rather than than the files on it.
I intend to put my photos, iTunes, etc. on a seperate 1 TB drive.