I built my own. I would recommend this enclosure for $48 shipped from Newegg:
http://www.newegg.com/Product/Product.asp?Item=N82E16817146602
Here is a nice, quiet 120gb Seagate hard drive for $62 shipped, also from Newegg:
http://www.newegg.com/Product/Product.asp?Item=N82E16822148094
All you need is a screwdriver to put them together, then format the drive to NTFS and you're good to go. That enclosure supports both USB 2.0 and Firewire 400 connections, so you can use whichever you prefer. As far as software goes, I use type types of software: file backup and system backup. For file backup, I use Replicator. Replicator is a free backup tool from Karen's Power Tools; just specify what files/folders you want it to back up to and where and you're done. You can do the backup either manually (which I prefer) or schedule it. Here's a link:
http://www.karenware.com/powertools/ptreplicator.asp
As far as system backup software, I use either Norton Ghost or BartPE with the DriveImageXML plugin. Basically, you install Windows, activate it, install the latest service packs and updates, install your favorite software, and then create a clone of it so you can simply reclone it to your main hard drive down the road without having to reinstall everything. When you reclone it, you just have to run Windows Update to get the latest updates and install whatever new software you've gotten during that time. I typically use Norton Ghost to make backup CD/DVD discs (bootable), but it can also backup to file on an external hard drive. Here's my tutorial on making backup discs, but to backup to a hard drive just select hard drive instead of disc when backing up:
http://www.wiredbynature.org/comp/ghost/
If you poke around online you can usually get it for under $20 shipped. If you'd prefer a free version, I'd recommend using BartPE with the DriveImageXML plugin. It requires more work intially, but works great for system backup:
http://www.nu2.nu/pebuilder/
Here's the plugin you'll need to incorporate into the boot disc:
http://www.runtime.org/peb.htm
Good luck!
🙂