What should I backup too?

I am setting up a backup system for a small network of 5 computers, using Windows XP and its own backup system. I shall mainly backup "MyDocuments" and Outlook pst files on each PC, and on the server the shared file folders, and the database (Microsoft Access).

There is one server PC, and 4 user PCs who access shared files on the server PC.

Where should I send the backup - should I add an external hard drive to the server and send backups of server files to that? And same for the 4 user PCs, each with their own seperate HD? Or shoud I send user PC backups to the server, or the servers seperate HD?

Also, on the server (which is always on) I guess a timed backup is best. But for each PC, will a timed backup say in the middle of the working day, slow down the PC, or is it better to set the back up on shutdown of Windows?

I am unsure the most effcient way to do all these things - thanks for any suggestions.