If a machine was having problems and obviously had a lot of driver issues and software problems, then a format is a good thing. But, if the system doesn't have any obvious problems, or is having problems that might be cured through other means, a format DOES take far longer than is worth it. If you could fix it by removing all the drivers for something and reinstalling it, why format? Or by cleaning up some configuration files, or anything else where you remove cruft.
Formatting is a pain in the ass. I've got too much software installed for it to be easy to just reload my system, and that's just the stuff I use on a daily basis. Just loading Windows, lodaing device drivers (which of course I've had to take the time to locate and put onto a CD or floppy) and then getting all of the Windows updates loaded takes forever. Then loading all of the apps I use daily, along with rebuilding their configuration files and any data files I backed up (if you're reloading, you wouldn't want to use the same old trash configuration files of course, or why bother reloading?). Then the apps I don't use on a daily basis. And of course before the format I would have had to locate the installation disks or files for all of those apps and put them somewhere that I could copy them back.
And just storing programs and data on one partition and Windows on another doesn't work, because most programs use the Registry too much now. You can't just reinstall windows and make a shortcut to the executable and expect most apps to work (and most of the time you'd want the start menu item to be installed, not have to go through and do each one by hand). SOME might be able to reload their own settings in the new Registry, but many have required settings that are only created by an installation of the program.
About the only thing that can safely and efficiently be backed up and restored are data files and a few minor applications. Anything else will require a reinstall, with all of the discs and files having to be located, along with any patches or updates or upgrades, and any serial numbers needed.
Far too much time for me to spend on it unless I absolutely had to. I manage to keep my system in pretty good shape just by doing regular maintenance. I don't install stuff I don't need, and when I uninstall something I make sure all files and settings are removed if possible (it's hard sometimes if files get installed to \windows\system or something like that, you can't be sure what's what). I go through in Explorer once in a while and just browse my file system looking for crap directories or files, and I do the same in the Registry looking for deleted program references. I've only twice tried a complete reinstall, and though I'm sure it helped clean up some of the cruft, I don't think it was really much of a performance improvement. It just made the system feel cleaner.