This is a quote from Apple technote 93041:
Be sure to make regular backups of your music files (in your iTunes Music folder) by copying them to an external hard disk or other media. If your hard disk becomes damaged, or you lose any of the music you've purchased, you'll have to reimport all your songs and buy any purchased music again to rebuild your library. You can also make an audio CD of the songs you purchase so you can listen to them in a consumer CD player.Fire up the backups!
Mac OS X Hints
http://hints.macworld.com/article.php?story=20030429122514682