If you really are scared, start with a backup. There is no excuse not to, with external drives getting cheaper every day!
My personal setup and standard procedure, which I heartily recommend:
- Time machine drive, with time machine backup, updated when I remember to plug it in.
- On a separated physical drive, a bootable clone of my HD (updated weekly with SuperDuper)
- Before each 10.x or update (at least): update TM, update bootable clone, unplug the drives, go with update.
Why a time machine backup?
As they say: “There are two kinds of users: those that backup their data and those that will”. Don't wait your first disaster. Don't buy it soon, buy it NOW.
Why a bootable clone?
For a number of reasons:
- If my internal HDD failed, my TM backup would be completely useless until I replace it. With a bootable clone, I can continue working roughly were I left while I repair the disaster. Of course YMMV, especially depending on what work you do with your computer.
- In case ALL my laptop fails (e.g. logic board failure, screen exploding), I can still work by attaching to some other computer and booting from there.
- My TM backup may not be so restorable (see this blog post for an example). TM is really a great technology, but has its points of failures and you really really don't want to experience them.
Because it can do delta updates, so that I don't have to move half a terabyte every week.
Also, the guy that makes is is super nice. I've never used it, but Carbon Copy Cloner is another software with similar features.
On upgrading to Lion
Snow Leopard improved vastly the upgrade experience (see the Ars review), handling with incredible grace failed installation (I experienced this personally - twice). It is safe to assume that Lion further enhances the process, so (once you have at least a time machine backup), I think you can upgrade with confidence.
Just one tip: the Lion installer has to check your disk and repartition it. This is not really scary (it may be even healthy to your disk!), but this can mean that the “remaining time” could be VERY off; on my laptop, the advertised 33 minutes were more like two hours; resist the temptation (and the panic) and let it finish! Grab a beverage and a good book :)