I it all depends on how much is your budget. Some would prefer setting up a home file server or purchase a network attached storage device like Drobo. Some would subscribe to Picasa or Flickr for their online backup storage for processed photos.
Me, I subscribed to Flickr Pro account. It's cheap ($25 USD) per year and reliable. I heard Picasa is much better because it retains the quality while Flickr seems to apply a certain post processing to your photos. It's like having your photos printed in your commercial photo printer and saying print "as is" or not. But Picasa is a bit expensive for me. I'm happy with Flickr and it saved me one time when my hard drive crashed.
As for my RAW files, I just put them into DVD if they reach 1 year old in my PC. I can't afford NAS solutions atm but I'm working towards that path.
1. All RAWs and processed photos into a NAS solution
2. All processed photos backed up online into my Flickr account.




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Hard drives can fail without warning despite the presence of SMART monitoring. There are also other online backup solutions available like Dropbox, but for photo storage size, nothing beats Flickr.