I back up to the internet using both Mozy and Carbonite, plus an external USB hard disk. I paid for a Carbonite subscription, then I got Mozy for free from my work. Both work well, The good thing about the internet backup is that it's always available, whereas you can have problems with a USB external disk. Between the two of them, internet backup and a local USB disk , you have pretty good odds of not losing anything. I use Retrospect to backup to the USB disk.
I've used the backup on the external USB disk to recover specific files, and used the the internet backup (Carbonite, specifically) when I re-installed a Windows XP desktop. It was very useful to have all the data files, photos, bookmarks, etc. available for selective download/re-installation on a newly re-installed system.