Remember--a fire that melts your PC and primary data into a molten puddle of plastic and metal will have a similar effect on that portable USB hard drive sitting next to it. You need to take additional steps--like storing the external USB drive in another room. For better protection, you can use a fireproof storage box.
While it provides additional protection, physically moving the backup data after each backup is not very convenient, and any solution that requires manual intervention like that is almost bound to fail at some point. Instead, you can use a disaster proof drive like those offered by ioSafe.
The ioSafe drives are capable of withstanding fire temperatures as high as 1550 degrees Fahrenheit, and can also survive being submerged in up to 10 feet of flood water as long as three days. Suffice it to say, if a disaster strikes that destroys your data on the ioSafe drive, you probably have even bigger issues to worry about.
Of course, an alternative solution which is rapidly gaining mainstream acceptance is cloud storage. Neither a fire, nor a flood at your office will have any effect whatsoever on your data stored safely at a remote data center hundreds of miles away. Services like Carbonite or Mozy offer solid backup solutions with simple tools to help you automate data backups to the cloud.
Regardless of how you choose to protect your data, and where you choose to store it, it is crucial that you back up your data on a frequent and regular basis. It is also critical that you make sure your backup data will survive whatever disaster it is that destroys the original data, and that the backup data is accessible so you can restore it when necessary.
Murphy's Law is watching you. Don't get caught without insuring your data.