I backed up mine a few months ago when I changed hard disk. It restored absolutely everything. I wouldn't even have known I changed disks (apart from the space obviously) all my videos, music, saves, downloads (free and purchased). It does everything.
Only thing I would say is I didn't have singstar then, and heard a few dodgy things about that when swapping consoles, but I would have thought they are no problem during a backup because a restore can only be restored to the same machine that made the backup.
I can answer this first hand I have used it twice for 2 different reasons.
The first time was when my PS3 was a month old.. It started to lock up, so was swapped out.
At that time, my Hard-Drive had 15 gigs of files on it (mainly demos and downloaded games (i.e Warhawk, Tekken, etc) and when I looked at the USB Hard-Drive I was using, the backup file was roughly the same as the amount of data on my PS3.
But when my replacement PS3 arrived and I tried to do the restore, pretty much nothing got restored, because it was a different PS3.. My saves were there, but almost nothing else.. So I had to download almost everything.
Then a few months back, I upgraded to a 250G drive.. Now, my PS3 had around 30gig of data on it and again, the backup file which was created was just over 30gig.
This time I restored to the new 250G drive and EVERYTHING got restored.
So, in conclusion, the 'backup' backups EVERYTHING.. But the 'restore' will only restore what its allowed too, based on copyright restrictions.