External storage is perhaps best for collections of photos, downloaded music, and similar (files which are never going to change oce they are on your PC). A client of mine with thousands of family photos has an external drive and a scheduled task backs up everything once a week.
If there was a fire, then yes, odds are they could lose the lot, but these are not company records or similar and while they could have more than one external drive, and leave one at their son's home (and vice versa for the son) the need is not that high.
Another client who does have business related documents has been using DriveHQ.com which provides a backup application where you can schedule backups of various folders or have a 'hot backup' option which means that any modifications or new documents will be copied away to the remote server fairly soon after.
I don't remember how many hundred MB of files are protected in this way (a backup is made to CD from time to time, too) but even with relatively low speed connection there is no problem doing this. He does not use the remote backup for MP3s though.
I believe Bing (Hotmail / Live.co.uk) now offers around 10 GB of storage for free and 5 GB of that can be for music/ multimedia, but have not tried it myself.
There was a fairly recent thread (within last 6-8 weeks about online storage) and Carbonite was a service I remember (perhaps one I mentioned) because if someone has large quantities of data to backup, they have a flat fee with no limit, unlike several alternative firms.
Do search... the person asking is currently in Beijing so a 'advanced search' in geeky_stuff should find the thread either looking for Carbonite or China or Beijing