External, plus second backup in the cloud for some data (all encrypted), plus third (photos) on DVD once a while. No images backup, data only.
Both, I have a fairly elaborate backup strategy. http://www.dedoimedo.com/computers/backup-strategy.html Mrk
I backup Images mainly to internal hard drive with the occasional transfer of these Images to an USB hard drive.
Where's the option for both? I use the internal HDD for snapshots and external for weekly offline images.