Although few people do it, restoring from backup is the only way to ensure that your backup and recovery system works. Since upgrading to Leopard, I have been using Time Machine to back up my laptop over the network (onto a and external hard drive connected via USB to my Airport Extreme). What better way to test a restore from Time Machine than to put in a bigger hard drive and restore? I figured if it didn't work, I would still have my old hard drive (still working but too small).
I am happy to report that the restore went perfectly. The general instructions are to be found here. The only difference is that I restored from the network rather than directly through the USB port. The one little hitch I ran into was that it took a couple of times for the utility to see my new local hard drive.
I am the kind of person who is frequently shocked when things work as advertised so I was in awe that, after I swapped out the hard drive and ran through the process, it was like nothing happened but the free space of my hard drive grew. All the software was as I left it. Even my BASH history was intact. The only thing missing was my "Downloads" - I had to recreate it. I guess this is because Mac regards this as a temporary space and not worth recovering.
So, don't hesitate to set up Time Machine. It could help you recover from a massive hard drive failure, a stolen laptop, or any other disaster - as if it never happened.