Joe's Hardware Recommendations
I strongly believe that decisions about hardware should not be made on price alone. You may find the cost per gigabyte of storage to be only $0.15 for DVD-R, for example, versus $1.00 for a hard drivebut that's only part of the story. Speed, convenience, flexibility, and the ability to make bootable backups all add tremendous value to hard drives. Even if you can afford only one external hard drive, making it part of your backup system will pay for itself many times over in saved time and aggravation. If your budget permits, two or even three moderately large external hard drives are definitely the way to go.
That said, if you're looking purely for the most economical hardware path, use your built-in SuperDrive and record backups onto DVD-RW media. Your hardware cost is zero, and $50 should buy you enough blank media to last years.
The Iomega REV comes much closer to the sweet spot at the intersection of capacity, speed, and affordability than optical, magneto-optical, or digital tape media, not to mention Zip and Jaz drives. Assuming REV turns out to be reasonably reliable, it's not a bad choice, but I recommend it only if you can comfortably fit a complete duplicate of your main startup volume within the 35 GB limit of a single REV disk.