The backup feature built into Windows 7 does incremental backups. The first time you run the backup feature, it will need to be set up. You'll need to tell it where and what you want to backup. Your first backup will be a complete, full backup of all the data that you specify. After that, Windows will start doing incremental backups of only the data that has changed, or been added since the last backup. Every once in a while, though, Windows will do another complete, full backup. These full backups are called backup "periods" and will show up in date ranges When you click "view backups".
When you set up your first backup, you can specify what data you want backed up or you can let Windows decide. Don't be afraid to let Windows decide because when you do, Windows will backup everything, including, all your personal data, settings, themes, libraries, mail, contacts, etc. This includes data for *all* users on your PC. The only thing Windows 7 won't backup is the operating system, itself, and any installed non windows programs.
The good news; When you let Windows decide what to backup, it will also automatically create a system image. The system image will restore your entire system back to a state that it was in when the image was made, operating system, and all.