Back Up, Back Up, Back Up
Not only is it prudent to back up your data, it's critical if you're formatting and doing a clean installation of your operating system. If you are formatting, you should back up your data to some type of media (CDR's or a second partition that won't be involved during the formatting). During upgrades, most often data is there; but I'd recommend backing up just to be certain.
Here are a list of some of the things you should consider backing up:
Documents and photographs
Downloads
Email (don't forget your address book/contacts)
Favorites
Passwords
Programs and software
Games that are saved
MP3's
Movies and videos
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