Buy and use Norton Ghost and backup the whole partition.
Consider setting your partitions with PM8 (its superb for this), personally I have reduced my c: drive to 4Gb and installed all my programs on the D: drive.
Then I have backed up the c: drive with Norton Ghost such that, should I have a problem, I can re-install the whole OS partition (including various drivers, dlls etc) in one go thus restoring the system completely.
The advantage of this (in my eyes) is that my backup (on cds - only 2 at present) can be stored away from the pc.
I also don't have to back up the c:\Program Files - which is huge because I've got installation cds for all that - so why back them up?
By keeping the OS partition small (this is the most changeable drive as windows is dynamic), it and any data I produce are easily backed up without the overhead of backing up unnecessarily - which in my opinion is why most people don't.
I also have two small drives for personal data, one for me, one for the wife. Similarly, these are 'ghosted' once a week and kept remote.
This system 'costs' me about 20 minutes a week which is chicken-feed compared with that awful sinking feeling when you think you've lost all your data.
The backed up partitions COULD be kept on another partition but I believe you would have to use a bootable cd - that can be produced in Ghost, but I'm not quite sure how as yet.
I personally believe that no floppy drive is not good and would not elect to go down this route.
I hope you can pick something useful out of my ramblings.