Carbonite and the like are good for convenient backup of data, but do nothing to help if you lose your C: drive when it comes to rebuilding it.
Think: hard drives fail. It's in their nature. Putting the onus on someone else to do the redundant backups is easy, but you lose control over that data when you do so. It's like putting your valuable in a storage place; Sure, it seems safe, right up until you discover someone broke in and stole your stuff (and, yes, it happens.)
Then think about this: let's say your C: drive does fail. Sure, you've been a good person, and have all your CDs/DVDs of your OS and apps, but you now have to go through all the mind-numbing drudgery of re-installing them, and updating them. Many hours lost. Then you have to download all your data; even if you have a fast connection, this can take days.

Instead, there's a solution that takes the drudgery out of the equation. Yes, it costs a little (very little, taking into account how valuable your time is worth); an imaging application.
I use Acronis TrueImage. With redundant backups, if I lose my C: drive, I can be back up and running in a few hours, without the hassle of loading disks and updates. Add to that the fact that I have control of the security of my own data, and it's really hard to beat. And security is something that's important. How many of us have financial data on our systems? A lot. How secure is Carbonite? I have no idea. And neither do you. The vast majority of hacks are never reported. Include the security of your data transmission (or, rather, the insecurity), and I get scared. The NSA is just one three-letter agency regularly scanning our data transmissions.

External drives are cheap, considering the costs of using a third party. Their services may be cheap, or even free, but server farms cost a lot to keep up, and they need to make money somewhere. Do they tell you where?
Using your own drives for redundant backup becomes downright cheap real quickly.