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Backup Help / Advice needed

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Hello,
I am newish to the apple world and looking for advice. Can someone help? I'm pulling my hair out :(

We have our first MBP, purchased mid2011 (running 10.6.8). I need to get some kind of backup system up and running - it's gone on too long that we haven't done so and I feel like I'm just waiting for something to happen. :/

Right now, we dont' do much other than a few word/excel documents, internet, watch videos, storage for photos/music. We don't have a lot of data - but I don't want to lose all those photos.

I keep having doubts about what to do. Everyone seems to have different answers - even apple support.

USB External harddrive: I'm gun shy about getting another external. I have had one and it failed at the same time as my PC hard drive died. I lost all my data. As if losing all that data wasn't enough, I was scolded by the data recovery people not to use only external hard drive for backup.

time capsule:
the new one ($300 - 2TB): I need to upgrade to use it. I need to backup in order to upgrade...so I"m stuck. I also have issues b/c it's technically an external harddrive and, like I said, I am gun shy about External HDD. Also, depending on who you talk to, I may or may not benefit from increased speed/range. I like that it will backup wirelessly, while my machine is on.

the refurbished older one ($200 - 2TB): cheaper but same basic issues.

online backup: I don't know where to go or who to trust on this one.

Can anyone give me guidance? I'm lost.
Thanks,
Jen

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