1) Provide a means to recover all your data in case your disk drive fails or your file system gets corrupted.
2) Provide a means to recover individual files in case you accidentally delete one or make a change and then discover you need to get the original version back again. Ideally, you should be able to recover a version of the file from way back in case you don't discover the problem for a while.
Image backups are good for (1), but they use up a lot of space and so keeping multiple versions of backup is more difficult. And most image backups don't allow recovery of individual files.
A decent combination to start with, assuming you have Windows 7, is to use the Windows 7 "System Image" backup utility for (1) and keep just the most recent image or two to recover from disasters. You only need to make a new image if there's been a significant change, or you can make new ones on a regular schedule - monthly, perhaps. I've tested this and it works well - but I'm not so sure if it will work for the XP partition.
At the same time use Windows Backup at regular intervals - every week, for example - to back up the individual files. Windows backup will back up all files on the first run and then after that it will only back up the changes.
As long as both partitions are visible to Windows 7 (i.e., they both have drive letters that you can access) then Windows 7 backup should be able to back both of them up.
I think starting with Windows backup is a good plan because it's free and it'll give you a taste for the process. If you discover there's something you don't like about it, then you'll have a very good idea what you need when you go looking for a third-party solution.