You may have noticed some other sites reporting on how the upcoming update to Windows Phone 7 will bring a Backup & Restore feature. The feature is already part of the Zune client, and it's not what you might expect. The backup is really more of a system snapshot that's taken before and only before a system upgrade. There's no user-configurable or scheduled backup happening. The only reason for this backup that happens before a system upgrade is so that you can restore to the previous system version in case there is something you don't like about the new update or perhaps you have some old applications that haven't been updated to work with the new OS or maybe something goes wrong during the update process and you need to restore your phone in order to try again.
Andrew Brown is a Windows Phone 7 Product Manager in charge of the Microsoft Update portion of Windows Phone 7