Another new feature of the newly-minted iTunes 7 is that the program now features a built-in back up system, similar to that originally found in iPhoto. The function allows you to copy either your entire library or just your iTunes Store purchases. However, you are limited to backing up to either CD or DVD, no external drives and no networks.
Select "Back up to disc…" from the file menu.
Choose your entire library or just your purchases.
Wait for the disc to burn.
Your music, videos and podcasts are now safe and secure on a new back up disc: