Its fine for data files (My Documents, videos, pr0n, MP3 etc), but dragging your Program files etc. and then putting them back once you have restored your laptop is 99% likely not going to work - when you install software, files get placed all over the shot (e.g. c:\windows\system32), and entries are made into the "registry". These states are not straight forward to backup and restore...
Hopefully, your recovery CD has all the software you currently use...
Otherwise if you had downloaded any programs and installed them (e.g. MSN Messenger, itunes) or borrowed someones MS Office and installed that, you will have to do the same again after you have restored from your recovery CD(s)...
It is also worth noting that a lot of your "settings" will need to be re-done (e.g. wallpaper, shortcuts, settings saved in MS-Word etc.)
D. :mat: