Our 500GB external USB drives came in today. Under MacOS Leopard, you just plug it in and it asks you "do you want to use this drive for backups?" You click yes, and it takes care of everything else.
If you need to restore a file, you open the folder it was in, launch Time Machine, and scroll back in time through the coverflow of folder views until you find the one that most recently had the file you want. Select that file, click "Restore", and you're done.
This has got to be the most intuitive and painless backup system I've ever seen. Color me very impressed.