I have a small partition on my hard drive which is only for the purpose of remastering. I started with installing the latest livecd, installed all the programs I use, set up things like I like them, then fully updated. I left the root and guest user passwords as is, no other user. Then by running the mylivecd program, I have a copy of my system as used. I do this once a month, or after every major update. My data (MyDocuments, MyMusic, MyPictures,MyMiscellaneous), all resides on their own partitions so that if I have to reinstall, I will just make links to those partitions in my user system.
This way I also have a livecd of a generic system I can give to friends, relatives or family. This livecd is about 1.2GB, so it must be a DVD. I have three dvd-rw that I use in rotation.
Yeah, I gotta agree, the new mylivecd program works great this way, no need to "exclude" a bunch of stuff. Before I update my backup, I just uninstall or install whatever has changed since my last update.