Another vote for an external HD connected with USB connection. If any material being backed up is particularly important don't rely on a single back up. e.g. burn to CD/DVD too. I managed to trip on the power chord of my HD which then met the floor in a rapid deceleration situation. It doesn't work now.

Phil's suggestion that a larger internal drive is cheaper may be correct for the hardware but I'd guess that, unless you are happy to install it yourself, the tech charges would more than wipe out the difference.