I use my 2 x 60GB drives as follows:
Windows XP on the C:\ drive with audio, data, photos, XP updates files etc. in their own folders which are then backed up to the D:\ drive on a daily basis using simple batch files.
I used Acronis TrueImage to back up the C:\ drive with an image of a freshly installed system and roughly once a week I take a fresh image which replaces the previous weeks image.
Following a catastrophic power supply failure which 'took out' both hard drives and the DVD drive I have now introduced an external 120GB USB 2.0 hard drive into the equation (and fitted in-line fuses to the internal drives). This external drive replicates the data and images on the D:\ drive. Paranoid I know but some of my data is irreplaceable.
By the way the TrueImage backup enabled me to return my system to its original state in less than 30 minutes after the failed hard drives were replaced.