Laptop help needed-Bluescreen

[Another Castle]

I have owned my Vista laptop for a year now, but there is a problem I have been having with it- sometimes it freezes/crashes, and other times I get this:
http://en.wikipedia.org/wiki/File:Windows_XP_BSOD.png

I was spooked when I first saw it!
Now, I am pretty naive when it comes to computers- I'm no technophobe, but I'm no expert. I feel this could be dangerous, and am a bit worried if I am going to lose my data.
What should I do to fix it? Like I said, I am naive about things like this, so I encourage you to speak to me like I am 8 years old (and not as smart as Mac!) I feel like I may be missing out on some important/obvious knowledge.

Also, my computer keeps suggesting I should back-up all my memory- how should I go about doing it? should I copy all my photos/music to a USB/disc?