In all sincerity, I use both on my rig. I have a 120GB SSD for my OS and applications, I have a 1.5TB HDD for my media/document storage and I have a 1 TB portable external drive to backup files and transfer them from my desktop to my laptop.
I also use hosted storage through Microsoft's skydrive for an additional layer of backup. I use this mostly for family photos and tax documents that I don't want to lose in the event of a disaster.
You may not need to do both, but at least for me I feel much safer about a hard drive failure not crippling my music collection or an additional deletion taking out a photo.