Currently we have an older Gateway PC and a newer Sony laptop. We use the laptop 99% of the time and it has 2 hard drives - all of our MP3s and photos are on the 2nd one.
I back up all of our images on DVDs every once in a while, but should probably get an external hard drive at some point and connect it to the wireless network.
The end goal is to get a server in the basement that all data is saved on, eliminate the PC and get a 2nd laptop.
You should look into the new Microsoft Home Server systems that hit the market. they seem slick.