You know - the obvious answer here is a portable, backup hard disk drive, as I am sure a lot of people will suggest (and is not a bad idea). If cost is not an issue - the new solid state drives (no moving parts) are most reliable - and the future of storage, but pricey.
But recently, even backing up to other disc drives - I lost a lot of files due to disc corruption (just ones I hadn't moved to the backup yet) - and it makes me nervous about even my backup disc drives failing, because of the amount of work invested in my files.
So, I am really serious now about getting one of these offline data storage plans. I have not fully researched it yet - but from what I've seen - the files are secure, and if I remember correctly I costed it out at about five bucks a month if you pay far enough in advance. They will then back up an entire computer, unlimited storage from one device, encrypt and store.
So what I am going to do in the next month, is still keep my HDD backup system, but back THAT system up on one of these offline encryted services. Then you can completely wipe the drive and know you can get all of your files.
So what I would do - is go get a HDD anyway for on site backup - (I just got a new 500GB Seagate 7200 RPM for $70 - portables are a little more) - and also store offsite.
The link is for Carbonite - but of course I still need to look into some others.
EDIT: BTW - I have ALWAYS used a separate HDD for my OS (and save/burn the discs for any installed programs) and NOT just a separate partition. Even if you don't go buy an external big enough to back up ALL your files, you may want to think about just going and getting a reliable name brand HDD just big enough for an OS and programs. Then you don't even have to reformat this one - just switch it to a slave drive (easy) and keep all your files. The cost outweighs the benefit - they are so cheap nowadays.
HDD is just - Hard Disc Drive
A storage drive is obviously required for an Operating System, and program installations, and general file storage. An "HDD" has multiple "platters" or discs inside - with extremely fragile magneitic witing arms for each surface of the discs. This is by far still the most prevalant type of storage drive.
And PORTABLE just means that it has it's own enclosure, and cord for getting power. They can connect in a variety of ways, USB, SATA, etc. (and these affect file transfer speeds). But the actual spinning disc inside is no different at all than the internal one in your computer - just that it may connect differently (IDE or EIDE - old, SATA - newer), and have also a power suppply cord, (or some get their power through one or more USB connections)
But the future is flash technology - solid state drives. They can be dropped off a cliff and retain file information. They are still kinda pricey though.
I'm gonna quit editing my post - but I have not blocked email here on Y!A. Fell free to email me a specific question. I have been building computers for 15 years.
WELL OK one more edit - I didn't search very long for the best deal - but here is a very reputable computer hardware search site, where you will find the best deal for what you need. The example here is a 1TB (1024 Gb), drive that connects USB for $90 after a rebate. A good example.