from a user whos had to many sleepless nights at a computer to all-
one thing i do with my external 250gb FW 800 drive (which saved me yesterday), is i have it in 3 partitions, one at 60 gb as a weekly clone of my whole HD, one at 15gb as a nightly clone of my home folder, and the rest left for storage.
it saved me yesterday because i take a math class online (windows only applications), had a midterm due at midnight, and had made the mistake of updating virtual pc, which then asked for it's serial number again which is god-knows-where. after 30 mins of frantic rummaging for the VPC box and one large epiphany, i just plugged in the external, restarted my mac holding down option (brings up the boot-from-which-drive-? menu), picked the 4 day old clone of my hard drive, and booted from it. it was like going back in time 4 days! a couple of downloads were back on the desktop, i had 4 days worth of email to redownload, and, last but not least, virtual pc was obedient.
after doing my trig test (96% thankyou) i copied the few documents from my powerbook's internal HD to the external HD to get it back up-to-date, cloned the now-up-to-date-but-with-working-VPC external HD back to my internal, and it's like nothing ever happened. catastrophe averted.
fyi: the tool I use to clone is called carbon copy cloner. you cant just copy it yourself because computers are complicated and it wont boot.