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I have a MacBook Pro and am thinking of buying a Time Capsule. If I do, will I be able to use it as a backup and storage disk, and as a wireless router? I read somewhere that they can be used only as backup disks (I don't need one that much) and routers. I would also like an external hard disk to keep my photos and old stuff, though.
Additionally, do Time Capsules support connecting over PPPoE?
Yes. Time Capsules can be used for Time Machine backups as well as for general storage, though Apple recommends against it:
Time Machine works best if you use your backup disk only for Time Machine backups. If you keep files on your backup disk, Time Machine won’t back up those files, and the space available for Time Machine backups is reduced.
I personally don't believe that they will “work better” if you only use them for backups—I haven't had any problems with my setup, and it's been this way for a few years—but that's what the official knowledge base says.
It's easy to get at the general storage. I have disk accounts set up, so the way you do it might be somewhat different. My Time Capsule appears in Finder's left sidebar. When I click on it, two items appear: one with my username and one with the Time Capsule's disk's name. I double-click on the first one, and (after waiting a few seconds for the disk to spin up again,) I get a list of the files I've stored there. Finder also puts an icon on the desktop, which I can use to quickly get back to it. When I'm done, I either drag that icon to the trash, or click the eject icon next to the Time Capsule's name in any Finder window.
Time Capsules do seem to support PPPoE for Internet connections: in AirPort Utility's Internet tab, there is an option for PPPoE in the Connect Using drop-down box. I can't be 100% sure of this, though: my ISP doesn't use it.
As noted in Blacklight's answer, it's not recommended; but you can do it, and everything will work, just not optimally. Here's an explanation on why this might not be the best to do.
First, it makes sense Time Capsule wouldn't back up files stored directly on it. Where would it back them up—to itself, the same drive? That's not a backup of great value, but this isn't a true negative.
The bigger issue is that it's using a shared physical disk, with one potentially greedy process: Time Machine. It has nothing to do at all with network/wifi performance.
As you're trying to share the same disk, if Time Machine has many unpredictable reading/writing input/output occurring in the background, accessing other files on the same physical disk that Time Machine is accessing could result in sporadic performance hits. If Time Machine slows, no great worry, the user doesn't watch this background process. But if it takes too long to download/stream a large movie file because a heavy Time Machine write is simultaneously occurring, the user would think the performance of the Time Capsule was to blame. Apple doesn't want you to think its products are of poor quality, so they recommend you use them in ways that optimize perceived performance.
If you accept the possibility of slow access for stored items due to Time Machine commonly writing to the same disk, it should work fine (outside less space for the Time Machine image).
However, if you're expecting blazing and consistent access to content, don't use the same disk you're using Time Machine for anything else. Not even if you partition it. Get a separate drive, connect it to the Time Capsule, and use that. The second disk will not be affected by Time Machine's reading and writing processes.
I think the answer why they don't recommend it is quite simple. Your backuped data are always in two places, on your Mac and on your TC. The TC only has one disk so if you don't have the data on your Mac and the TC crash you are in trouble. If you want a home storage solution and a backup I recommend a NAS with time machine server included.
One issue to consider is the speed of transfer to the Time Capsule - if you connect over Ethernet your files get backed up at the speed of the Ethernet connection (1000Mbit/sec or 100Mbit/sec or even 10Mbit/sec).
If connected to the Time Capsule over WiFI that is another limitation depending on the speed of your WiFi. If you have an external USB 2.0 or 3.0 drive or a Thunderbolt drive the speed varies from 450Mbit/sec for USB 2.0, 5Gbit/sec for USB 3.0, and up to 10Gbit/sec for the newest Thunderbolt and USB 3.1 (these rates are maximum best case scenario and real speeds can be much less depending on cables or other limitations of the electronic interface).
You also have to consider the actual speed of the drive inside and that is usually less than the higher bandwidth interfaces like Thunderbolt and USB 3. Typically a good conventional spinning drive might be 50-120MB/sec and SSD drives can run at 200-500MB/sec.
Time Machine works best if you use your backup disk only for Time Machine backups. If you keep files on your backup disk, Time Machine won’t back up those files, and the space available for Time Machine backups is reduced.I personally don't believe that it'll “work better” if you dedicate the disk—I haven't had any problems with my setup—but that's what the official knowledge base says.