I'll start things off by listing essential software (usually free) for your computer. And I think one of the first things you should consider for your home computer is Mozy. (This isn't necessary for Siena Faculty/Staff computers on campus; we back up those files automatically.)
Mozy is automatic backup software. They will store 2 Gigabytes of data for free, or more if you want to pay for it. You download the software, set up an account, run some basic configuation (which folders to back up, etc.) and forget it. Mozy runs in the background and, every few hours, backs up the files in the selected folders.
That's it. The first backup does take a bit of time, but from then on, the software backs up any new or changed files, so it doesn't take many resources. Usually, you won't realize it's doing anything other than putting a log in your system tray.
But, if disaster strikes and your hard drive is toast, you just go to the Mozy website (http://mozy.com) and download all your backed up files.
I haven't had to use it, but it's a simple solution to data backup.