Some good advice from Joel Spolsky's blog.

Let’s stop asking people if they’re doing backups, and start asking if they’re doing restores.

 There are a couple of times I have started a job, and have tested the backups by trying to restore - only to find the backups were useless. In one case the tape drive had silently failed, and was so old a replacement took a few weeks to locate. In another the compressed backups were being FTP'd to another machine as ASCII text. 

In both cases, nobody had ever spent an hour or so to test that all that data being stored was any good for anything. Fortunately, we did not loose anything important (assuming some of it was important), but I am now a bit paranoid when it comes to backing up and testing restore procedures.