Time Machine is a good backup system, one I recommend to just about every Mac user. I like it because it's simple to set up, and perhaps even more important, once you set it up, there's nothing else you need to do. Time Machine takes care of everything for you, backing up data and even removing older files to make room for newer items.
Screen shot courtesy of Coyote Moon, Inc.
One problem that will eventually crop up, however, is what to do when it's time to replace the drive you use for your Time Machine backups. You may need to replace a drive that's starting to fail, or you may want a larger drive, so you can store more backups.
The process for moving existing Time Machine data is fairly simple if you use OS X Snow Leopard or later. You can move Time Machine data if you're running Leopard, but the process is a bit more involved.
Here are two guides to help you move your Time Machine data. Select the one that matches the OS you're using:
Moving Time Machine to a New Hard Drive (OS X 10.6 Snow Leopard or later)
Transfer Time Machine Backup to a New Hard Drive (OS X 10.5)