your contacts are already backed-up. They're in your gmail account now. As long as you keep your contacts synced, this won't be an issue.
my first g1 had a problem with the screen and eventually had to be replaced when it got stuck in landscape mode. I downloaded MyBackup to backup settings. When I got the new phone, and signed in, all my contacts, gmail, and calendar items downloaded from the network automatically. Using MyBackup my new phone was 90% the way I wanted it. I've noticed a few things do not back up.
If you have to do a factory reset on your phone, when you open the market and go to My Downloads, all the Apps you had on your phone right before the factory reset are listed and you can download them again easily. You must download them all at one sitting, as if you close the market and return, the list will have updated and anything that wasn't downloaded will no longer be on the list.
However, if you switch handsets, your My Downloads in the marketplace is empty. it appears the market isn't tied to your google account, but rather tied to the handset.
When you assign a ringtone to a person, this is NOT backed up anywhere. Not in google, and it appears MyBackup didn't record this setting either. So I had to go through and assign those tones again. Luckily only a few people have special ringtones, but still, it was a pain.
None were saved. I believe if you download the Opera browser, there is a way to sync them, either that or there was an app that imports your desktop favorites to the G1, but don't know the name.
Mybackup restored the home screen folders, with names, but the folders themselves were empty. All other shortcuts were restored correctly.
MyBackup and the Google sync made it less of a pain, but as far as I can tell there doesn't appear to be anything that synca/backs up everything. There will be some tinkering needed to get everything back the way you want it.