You can now do 2 types of backups.
1) Picking files and folders
2) Creating a snapshot image of your entire system
Backups can be sent to CD/DVD drive or a hard drive. Works pretty fast too.

Vista now implements Shadow Copies previously only on Windows 2003. The system stores previous versions of files in case you delete or inadvertently change one.

http://www.microsoft.com/windowsvista/community/backuprecovery.mspx