Whether you need to image your system or just create an "important file" backup depends entirely on your needs.
Imaging a hard drive makes a sector-by-sector copy of your data so you effectively have an exact copy of all the data on your system. If something goes wrong with your system, you restore the image and your system is functionally identical to the state it was in when you did the backup.
If you simply backup important files, when your system crashes, you will have to re-install the operating system, locate all of your original CD's, install all your applications, reactivate them, and re-create all your system settings and customizations. That is perfectly acceptable if you can afford the time and effort to restore you system.
If you do an image backup, all you have to do is overwrite your system with the latest image and you are done. The downside is that images take up more storage space. Also, when you restore an image, you could be restoring any problems your system had when you did your last backup.
Personally, I like a hybrid approach. I image my system for backups. But, if my system crashes, I will typically use it as an opportunity reinstall everything so I can start with a "fresh" system. Then I copy all my data from my last image backup. I like the security that I am not forgetting any important files in my backup. And, if I don't have time to do a complete re-install, I still have the option of just quickly restoring my latest backup image.