I've been using XP since it came out and System Restore is definitely a must have tool. It's not the best, there are some qwerks with it, but when you need it and it works...you will be very happy.
The cost of system restore is disk space, but disk is cheap.
I've been saved about 5-6 times by system restore, especially in the driver mismatch arena. I would say that I have even gotten a little sloppy with driver patches, since I know that I can almost always rollback.
On the question of partitions...I'm not a huge fan. I like making large drives out of large drives. My feeling is that If I want to protect the data, I need to back it up. I would say that you should consider either adding a second physical drive for your user data, or as a spot for backups...or just copy stuff to DVD that you can't do without. In my experience my data loss has come from this...in order.
1) OS failure or corruption -- This generally come from wonky drivers messing with the File table or virus level corruption of files and data. partitions will help with this some amount...so if you only have one drive, then do it. but lower level corrution of the partion table or MBR would still be an issue.
2) Drive Failure -- This happens. Some drives are better than others, but generally ATA or non-SCSI non-FC drives are much worse when it comes to failures. They will just die and you won't see it coming. In my case out of say 10 disk failures, 8 were predictable. That's not the industry standard, but I knew or was pretty sure I knew the disks were dying...which gave me a bit of time to recover before they were lost. Partitioning won't help with this situation at all. all drive partitions will be gone.
3) Component failure (Other) -- heat issues and motherboard issues -- usually can be fixed at the component level with no loss of data, just move the drives. (but some times lead to hard data loss in one of the above categories)...In addition, moving to a new motherboard usually requires a fresh install...as 4 describes.
4) Move from one OS to another -- I generally lose something when I upgrade or reload the OS. It's usually planned for, so it's not important stuff. Like losing programs when you reload, losing email from accounts I've forgotten about and such. I usually reload XP every 18-24 months...most often because I'm upgrading hardware.
5) User error -- I deleted something that I shouldn't have...and often don't know I did it until I need to find the file. The only way to recover here would be to have a tape backup to restore from...I don't.
My 2 cents
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