This happened to me a few years ago and I learned my lesson. I did almost exactly what you said, backed up everything to a 2nd drive, put that in a computer I RARELY used and then one day the drive fails, starts whirring like a blender, and 5 years+ of photos, music, and what-not is lost. Even my wedding pictures. Murphy’s law I guess.

I bought myself a $100 LG dvd-recorder the next day (along with a new drive) and back everything up to DVD twice. I’ve got about 30 DVDs worth of stuff at the bottom of a filing cabinet just in case. The good thing about DVDs is if I want to backup more data I don’t have to go through the bother of unhooking my main external drive (used for video editing usually) and hooking up another one. Blank media in big packs is getting pretty cheap per-disc nowadays too.

If it’s important, it goes on RAID. My home file server and my main desktop use Areca RAID controllers - it’s fast as hell (I’ve got 4 WD Raptors on my desktop in a RAID-5). Yes, it’s expensive. But what’s your data worth?

Oh yeah, and you still have to replicate and / or do off-line backups in case of accidental deletion. But hopefully you just filed this bit under “duh.”

I have a computer set up to do automatic incremental backups of my various servers and desktops every night. It’s saved me a few times.

One thing to keep in mind about recordable media (CDs, DVDs, etc) is that they often decay after a few years. So they’re good for medium-term backups (a year or two), but beyond that you should backup your backups every few years. They do make “archive-grade media”, and I use it, but I’m still not sure how far I trust it. I use it as a secondary backup system only.

One thing I’ve found is that the rate of increase in the size of hard drives seems to keep it possible to keep all of my junk backed up onto one drive (currently about a terabyte). So just spending $350 every few years on a new driver lets me keep an off-line copy of everything.

I dup things like mad.  I have a main server on my cable modem that’s my web server and mail server.  I also have a 2nd dev/gaming box.  I always stick an extra big disk in the 2nd box and regularly rsync copies of the data on the server onto it (note that I copy anything important into paths on the server too, docs off my laptop, game save files, full backup of itunes/iphoto, etc).

I also plug in an external disk into the server once in awhile and backup to that, and I keep that in my desk drawer at work… offsite backup. :)

I also often have copies of a lot of things on my laptop.

On of my favorite old sigs:
“Only wimps use tape backup: _real_ men just upload their important stuff on ftp, and let the rest of the world mirror it ;)”
(Linus Torvalds, about his failing hard drive on linux.cs.helsinki.fi)