I've been in the computer repair business for a while now, and this is exactly how it goes over and over again:

You know people that backup their data. You've seen hard drives that have notes on the box about backing up. Maybe you've even come across backup software before, but you don't use it regularly. Whatever the case, you don't back up your data. Then one day you lose your data. The most common way to lose data is from hard drive failure. All hard drives die, it's only a matter of time. So at this point, you have a computer that won't work, and either no backups, or maybe if you're lucky, you have old or incomplete backups. The next step is to call a computer person, like myself. Then I give you the bad news that your hard drive is dead and all it's data is lost. Sure I can put a new hard drive in and reinstall your system so your computer will work again, but all your personal data is lost. After much grief, you start over from scratch, and this time you start backing up properly. Next time you have a drive failure, you'll have a little bit of downtime, but you won't lose any data at all.

Disclosure: backups aren't a guarantee. If a meteor crashes into your house and hits your computer AND your backup drive, you're kind of out of luck. But data loss due to meteor is very rare. Almost all of it comes from failing hard drives. Even a brand new computer can have a drive failure. It's always important to have an up-to-date backup. Your new computer's warranty will cover replacing the hard drive, but it won't get your data back.

Do you backup? If not, you should start NOW. Don't wait until you lose all your data, like most people do. If you have Mac OS X 10.5 or newer (Leopard or Snow Leopard), it's extremely easy to back up. The operating system has really great backup software built in called Time Machine. All you have to do is plug in an external hard drive and turn Time Machine on. If you have an advanced setup, you can also use a network volume or a Time Capsule device as a backup destination.