It's fair to say that we now generate more digital crap than we ever did physical crap. OK, so it's not crap, but it is "stuff." Instead of stacks of CD's and boxes of photos, we collect files on hard drives. It took years to make the adjustment, but for a long time I actually turned the bits into CD's and photo prints, and I've got many boxes that have moved with me several times to show for it.
This change is both a blessing and a curse. It's a blessing for the obvious reason that the hard drive sitting behind the screen that I'm typing this on has thousands of songs on it, instead of racks of CD's, and about 21,000 photos instead of bookshelves full of albums. It's fantastic that all of that stuff is sitting there in a tiny package about three and a half inches long.
On the flip side, that's a whole mess of data that can suddenly disappear in the event that hard drive fails. And trust me, it will fail eventually. That's the down side. A CD or a printed photo won't break (though arguably, both will disintegrate over time).
In the old days, you made copies of stuff every once in awhile, probably to other disks, or if you were really fancy, a tape drive. The problem with these strategies were that you had to actually do something now and then for the backups, and in the event your house were to burn down, you were still screwed unless you were keeping a copy somewhere else. The biggest failure was still the human component, that you had to do something.
We live in a much better world today. If you have a Mac in particular, backing up your stuff is so dead simple that there's no excuse for you not to do it. You might have read recently about a tech journalist who had his stuff hacked, and he lost family photos never backed up, and all I could do was scratch my head, given his profession. Given the frustration I have with relatively few preserved memories of my childhood on film, you can bet that I've been careful to preserve my digital life as best I can.
My approach is both local and connected. First off, all of our computers (my desktop, and a laptop for each of us) backup using Apple's Time Machine, a part of the operating system. My router has a shared USB drive connected to it, and every so often, our computers copy stuff to it. We never think about it, it just does it. It's neat that you can go "back in time" and revert a file to a previous version, but I think I've used that twice since it was introduced.
The second part of the strategy is to backup to the Internet. I've actually done this for a very long time, but back in the day it was only with documents. Now I have several repositories. Music is stored with Amazon's Cloud Player service, and I think I pay $50 for a year or something to store more than 6,000 songs. Everything I've bought from them doesn't count toward storage, and I think the price is going down next year. Everything else I backup using a service called JungleDisk, which backs up stuff to Amazon's S3 service. That includes everything not music, including photos. I have about 260 gigs of stuff up there, mostly photos, and it costs about $32 a month. I wouldn't call that cheap, but I wouldn't call it too much, either.
Having the off-site backup is another win for digital stuff. In some tragic event where lightning fries everything in the house, or worse, all of this stuff remains redundantly stored on the Internet.
There are some issues, still. The first issue is that there isn't much video being stored online. The problem there should be obvious... the files are huge. I currently store all of my video on an external hard drive that sits behind my desktop, and far too infrequently, I back that drive up to another just like it that I keep in a box. I pulled that one out recently to backup the few files on my laptop for its replacement, and it seems to be exhibiting the "click of death." Not good. The solution here will be to buy a bigger drive to connect to the router, so the video gets backed up there, automatically, like everything else. You can buy an enormous drive for less than $200 these days, though that's still about the most un-fun thing to spend money on.
Not sure what to do about off-site video backup. I think I'm going to at least commit to backing up compressed and edited video online, though that will get expensive. I'm also (eventually) planning to get all of my film negatives scanned, and those will need to be backed up as well. These costs are coming down (I used to pay the same to store half the data), but not fast enough.
The one issue that is strange to think about if file formats. It's safe to say that the noble JPEG will be around for a very long time, but what about all of the camera raw formats? In terms of video, will H.264 be around for a long time? It's hard to say. My VHS tapes will not likely ever see a VCR again, but my DV tape has largely been saved into files.