Glenn Fleishman, Macworld:
iTunes backups of an iPhone, iPad, or iPod touch don’t contain apps and some kinds of media. They contain settings and certain kinds of documents stored within apps, and may contain images stored in an iOS device’s Camera Roll. Some apps that use iCloud or other cloud-based sync mark their local content as not needing to be backed up, since it can be restored by logging back into an account or resyncing.
Confused? Fair enough. What does and does not get backed up, and where various elements do get backed up, is a bit of a jigsaw puzzle. Glenn Fleishman does his best do lay all this out.
My two cents? Backup your music library, photos, critical documents on removable media, store it somewhere safe. Update that backup periodically.