Windows, alone, is 20GB in my Win 7 installation. What are you backing up?
The best option is to have a separate hard drive that you can make full hard drive backups to, not just selected data as the Windows backup program does. I use Acronis True Image
(not a free program) and do full backups - all partitions on my hard drive to a separate hard drive (internal or USB connected). Then if/when its needed its a fairly easy task to rebuild the drive to how it was when the last backup was done. I use the bootable rescue CD that I can create from Acronis, boot with that and restore or build the hard drive from my backup. The only user data that is lost is what user data was created since the backup, and if you do regular backups very little is lost.
The extra cost of a hard drive (or USB connected hard drive) and the backup software is worth it, if (when) it is ever used.
NEVER backup to the same physical drive (or partition on the drive). If the drive would fail and have to be completely rebuilt or replaced all data is lost.