Just use the iPod as an external, if you're going to have one already. I have my entire hard drive backed up to my iPod, along with freelance work I've done. I have a 40 and about half of it is filled with music, about 10 for my backups and 10 free.
I also have a Maxtor external disc where I keep backups of my freelance work, all of it, my video stuff not yet burned to dvd and a copy of my entire music selection in case my iPod is ever lost or stolen (I prefer not to keep the music on the hard drive where it eats space).
As Zammy said, with space these days, running out of space isn't usually a problem.
And finally, I have a backup of library and bookmarks on .Mac and a dvd backup of my hard drive that I keep at the office in case there's ever a fire or the Mac is lost/stolen.