A couple points from my experience:
1. You'll probably want RAID on all of your servers to meet uptime requirements. I've had several hard disk failures in the past year and never had to take a server down thanks to RAID 5. It works great for fault tolerance, but it does nothing for disaster recovery and as such doesn't really work into a proper backup strategy.
2. Most companies backup to tape to allow offsite storage of data. While it's true that using external IDE drives you can store the drive offsite, you'll run into a couple of other problems.
The first problem is storage ability. If your off-site storage company is only set up to store tapes, it will be considerably more expensive to store external disk units with them offsite.
The second problem is reliability. Hard disks are fairly fragile, especially compared to tapes. It would be very easy for an external disk to be damaged in transit, rendering the data on it useless.
The third problem is cost. While it's true that a couple of external IDE units are cheaper than a tape drive and blank tapes, it gets more expensive over time. Don't think about the 1-time cost of a tape drive when trying to figure out what your media costs for the year are, it will skew the math.
Most companies with a 4-week rotation using incremental and full backups with backups transported offsite daily will have a minimum 28 tapes for that cycle. Replacing those tapes with 28 external drive units will be costly, and that doesn't even address media for monthly or annual archival backups. A single 100/200 GB Ultrium tape costs about $45, less if you buy in bulk. That's hard to beat when you're comparing to external drive units.
For example, at my company we are using 76 tapes per year to back up a specific set of servers, and that rotation allows us to restore our system to the state that it was in at any specific date during the year. That works out to around $3000 per year in media costs (we get a discount from buying bulk). If we replaced those tapes with external drives, it would cost many times that amount.
3. Hard disk space is cheap. You can certainly find ways to include hard disks into your backup solution to improve recovery performance. If you had a drive array/SAN/NAS device on your network that is dedicated to backups, you could store a second copy of each backup on the array. In the event that you needed files restored from the backup, you could immediately pull them from the disk array in the server room instead of having to order a tape delivery from your offsite provider. This would generally be much faster, and your users would love you for it. More and more companies are doing this today since hard disk space is so cheap now.
We actually looked at this initially when we worked out our current backup strategy. The problem that we had is that we're generating around 220 GB of backup data every week. Since most requests for file restores are for files that were backed up in the previous month, we needed a storage solution that would provide approximately 1 TB of data. While that was certainly doable, we found the cost to be prohibitive. Under normal circumstances, we actually only end up doing file restores about once a month, usually because someone deleted a file by accident. I couldn't justify spending another $13000 just to be able to recover a deleted spreadsheet in 10 minutes versus 4 hours. Especially since most restores aren't so urgent that you couldn't wait a few hours.
My advice to you is to read a few whitepapers on backup strategies for disaster recovery (Veritas has some online). Figure out what specifically you need to be able to do. Figure out what kind of cycle will be required to support the capabilities that you need. Then determine which media format is most economical for you while allowing for some growth).