I was pursuing a policy of;
1. System Image every month
2. User files backed up every two months or so.
But there's no need for 2. Once you've done the above once to get the
hang of it, it takes only a few seconds to start browsing the Image next
time.
How often you should back up and what you should back up depends on
you and what you do. For some people there's no need for 2. For
others, the frequency of 2 isn't sufficient.
Essentially you should back up what you can't afford to lose--what you
can't readily recreate. What that is depends on how you use your
computer and what you use it for.
It takes time and effort to backup, but it also takes time and effort
to recreate lost data. If you back up daily, you should never have to
recreate more than one day's worth of last data. If weekly, there's
potentially a lot more to recreate. You should assess how much pain
and trouble you would have if you lost x days of data, and then choose
a backup frequency that doesn't involve more pain and trouble than
that you would have if you had to recreate what was lost.
Some things (photographs, for instance) can never be recreated, and
more frequent backup may be wanted for them.
At one extreme is the professional user who would likely go out of
business if his data was lost. He probably needs to back up at least
daily. At the other extreme is the kid who doesn't use his computer
except to play games. He probably needs no backup at all, since worst
case he can easily reinstall his games.
Most of us fall somewhere between those extremes, but nobody can tell
you where you fall; each person needs to determine that for himself.