If your iMac is new, it should already come with Snow Leopard, which has Time Machine already being part of the operating system. Time Machine is an application that automatically backs up everything on your Mac in the background. All you have to do is to set up the HDD, and it will back everything up periodically.
And no, you do not have to have an external HD to have greatest capacity than the main HD.
Augh you beat me by 3 minutes LOL!
Thanks all
My understanding was TimeMachine did not make bootable backups - obviously I am happy to be corrected.
Matt
Has something changed in time machine ... I assumed one needed to boot from the leopard install dvd and once past the language screen, go to utilities menu and choose restore from TimeMachine.
If that's is the case, it's not a bootable copy.