The question is what tool do slashdotters use? That is part of the problem, backups are the other.
I have passwords for myself and all of my clients, so the tool I use (Password Safe) has hundreds of passwords that are not easily retrievable, or not retrievable at all. So I have to keep all of my passwords, but loosing a laptop with my passwords, would mean more than worrying if someone would get into my bank account. It would mean I have tons of customer passwords lost.
I store all of my passwords on a USB key. The password files are encrypted on this device, it is also my "master copy"
When I update a password, I copy the password database to my home computer (Unencrypted I am not concerned about a theft resulting in my password tool being cracked) My home computer is backed up to Mozy.
I then copy the update to my laptop (Unencrypted)
I have 4 copies of my password files. I can tolerate loosing any one of them.