The best way to protect data is to back it up to a server, daily. You
will need high speed internet at home for this to work. In my
experience with these things, USB keys are lost or forgotten somewhere,
although they make a great secondary backup for things which are really
important (ie: presentations).
If you don't have fast internet at home, or if your files are too big,
then consider a portable hard drive. I would not recommend putting
your home directory on the drive, because it just creates a mess. Keep
the drive neatly organized, with only your work on it, and keep the
mess on your home machine. When you are working, copy the relevant
files to whatever machine you are working on, do your work on that
machine, then copy the finished work back to the drive. This is a
valuable safeguard against accidentally wrecking something and saving
it. Copy the whole drive over to your home machine or laptop at least
every week. That way if you lose the drive: 1) your home machine still
boots and 2) it may have a copy of your data. Ultimately, data
protection is about redundancy. Your home and work machines should not
require a portable hard drive to run. They should have a copy of your
data if possible.
Also make sure you format the drive with FAT32 or whatever "lowest
common denominator" filesystem Windows XP supports. Sometimes you are
in a hurry and you just need some blasted file off your drive, and all
you have access to is a Windows machine. Of course FAT32 is supported
by virtually every Linux distro as well.