keeveek: I can't understand the reasoning behind this, but well... It has to be amusing to watch a situation when your 3TB hard drive breaks down :P
When it does, I swap it out with the replacement on which I made the backup. I wouldn't call it amusing, but it's hardly dramatic. Like I said, this happened to me a few weeks ago and my backup saved the day. No fuss, no muss.
As to the reasoning, it's simple. When I get an urge to play a game, it's there. I boot up, launch the game, and I'm playing. Would you buy a car and leave it at the dealership until you decide to use it? Of course not. You'd keep it in YOUR driveway so when you need it, you just hop in and drive. If I didn't plan on playing it, I wouldn't have bought it. :)
Arkose: If you back up the steamapps folder directly as others have recommended note that when you restore it Steam will say the games aren't installed. This is normal. Simply tell each of the backed up games to install and Steam will start checking the file integrity. The game will be listed as "downloading" while this happens but no actual transfer occurs unless the game has been updated since you made your backup. Steam will then start the first-time install process and everything works as expected.
By the way, this also works when you have a corrupted registry (Norton Utilities, for example, kills the steam registry entries) and your games won't start. Just move your steamapps directory off to somewhere else, uninstall steam, reinstall steam, and move the original steamapps directory back where it belongs. Your registry entries will be all fixed and your games will run like new.