Nowadays you can't do without partitions.
It's always a good idea to work with at least 2 partitions; one for the operation system and one for the data.

Let's see for example what I have stored on my data partition;

Outlook Express email folder
Outlook Express address book
Photoshop files
Office documents
Favorites
MP3
Stock photos
Software
Downloads
Ebooks
Database files, PS Preference file, programming, several other miscellaneous files...etc...etc...

My operating system is stored on the C: drive and I have a backup of it on 2 or 3 CD's (using Symantec Ghost)
If I have a problem with my OS, then I can restore my backup in 10 minutes without having to worry about losing important data on my C: partition. After these 10 minutes everything is working again as if nothing happened.

It's also easy to make a backup of your data, since the only drive you have to worry about is the D: partition.

A second hard drive is even better; a great place to store the backup of your data and your PS scratch disk and Windows swap file. I know, another 3 partitons http://www.talkgraphics.com/images/smilies/biggrin.gif

The most precious data is burnt on CDs every few months.