There are as many different answers to this question. As usual it depends on what you need to backup and also how quickly you need to get back to your data.

Prior to Windows 7 most user created data was stored in the users “My Documents” directory. How ever many programs would store data in the hidden “application” directory.   This would be fine in some cases but many of these programs included email programs life Thunderbird, Outlook Express and Outlook.  Most people would consider their email worth backing up.

Many of these email programs can be modified to change the location of where it stores it’s users file. I do suggest changing those so they are in the “My Documents” directory.

With Windows 7 almost of the user and application data is located in one place so it is easier to manage.