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I actually use Parallels and Boot Camp together, on the same partition. There are a few things I can't do via Parallels, so I just boot into Boot Camp.

As for backups, since you're backing up a static partition, there are a number of tools that can be used to simply image it, like Disk Utility. I don't do enough in my Boot Camp partition that I'm concerned about daily backups, so I just manually fire up Disk Utility and create a disk image of the Boot Camp drive once a week or so.

As another alternative to Parallels, you might want to check out VMWare Fusion as well. I've been playing with them both as of late, since Parallels has limited to no support for non-Windows operating systems. VMWare Fusion is a bit new right now, but looks to be coming along nicely, and for some reason I think the folks at VMWare probably have a bit more experience in the whole virtualization space.
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