Windows 7 includes both data and system backup software.
1) System Restore
Constantly saves system info and files, even your documents. For example, if you mess up a Word doc, System Restore will have the previous version. If you install a new driver and it messes up your PC, System Restore can revert to the previous driver.
2) System Image
A clone
http://windows.microsoft.com/en-us/windows7/What-is-a-system-image
3) Windows Backup
Traditional data backup
Accessed via the Backup and Restore control panel
http://windows.microsoft.com/en-US/windows-vista/Back-up-and-restore-frequently-asked-questions
4) Backup to the cloud
There are a lot of great tools to automatically back up files to the Internet. Here are three I have used for Windows.
Dropbox.com
Highly recommended
Automatically backs up a folder of your choosing
2GB free (you can pay for more)
Windows, Mac & Linux compatible
Syncs among your machines PLUS keeps a copy online
Mesh.com (Microsoft Live Mesh)
5GB free
Backs up multiple folders
Syncs among your machines PLUS keeps a copy online
Skydrive.live.com (Microsoft Windows Live)
25GB free
You manually save files, not automatic
Online only – does not sync to you your machines