There are many different scemes for backing up data, but basically, there are three different types of backup operations:
Full Backup - Backup up all files on your system, including registry info, etc.
Differential Backup - backs up all files that have changed since the last full backup
Incremental - Backs up all files that have changed since the last full or incremental backup.
When you need to restore data, you first restore your last full backup then restore differential or incrementals until you are up to date. There are different tape rotations schemes depending on how many tapes you are using.
Its also a good idea to keep at least one recent full backup tape off-site, in case of disaster. We do a full backup once per week, and a differential every day. Full backup tapes are stored off site.
Something else very few people think of is to do a test restore...you don't know how well your backup is working until you have to use it for a restore.
We use Veritas Backup Exec, it's a great package, but probably not suited or priced for the home user.