Has Vista rendered Incrementals obsolete?

You can exclude restore points by putting this in your exclusion list

C:\System Volume Information\{*

IIRC, they are usually deleted anyway when you restore your disk.

I tend to defrag my disk once a week by modified date, then use MST Defrag as a real-time defragger with no optimizing. My system images are usually ~8GB, with a daily differential that starts at ~300Mb and ends as ~1.2Gb after a week.