The backups aren't as important as each git repo is a fully blown code. If your local repo is destroyed, you still have the server copy. If your server blows up, you still have the local copy.
There are many other good reasons for a service like Github, like the excellent collaboration features, the really good repository and history browser or the good bugtracker.
If you don't need those (small team, working alone) but are concerned about uploading your intellectual property to a third party server in a potentially foreign country (depending on your location), then quickly setting up gitosis / gitweb / redmine might be enough for you.
In my personal case, I would really love to use github even for my small team, but I'm too concerned about the legal issues to go ahead with that (and the local installation is plain too expensive).
What legal issues/other issues from uploading your code to GitHub are you worried about?
I can't imagine that GitHub would steal your code. They've never heard of you, they have no reason to believe your code is worth anything to them, and one "I have pretty damn good evidence that GitHub stole my code" could ruin their entire business.
You mentioned legal issues. Are you afraid someone's going to ... subpoena your code or something? Because if that happens, you'd have to turn it over anyway.
They've got some pretty intense-looking security, and people like Twitter trust them with their code. If they aren't worried, why are you?
2: I don't know that that's officially known, but I saw Twitter commenting on the "GitHub now has Organizations" post complaining about the lack of the cheaper plan that they added the next day. So they definitely have some private repos on GitHub.
I don't live in the US. Our company isn't based in the US. While I'm somewhat familiar with US legislation by reading HN, I certainly don't feel comfortable to upload my code to US based servers of a US company as I plainly don't know their laws well enough to trust them with my companies intellectual property.
Of course, I could always trust them for now and instantly remove my stuff when there are signs of trouble, but I asked them (a year ago) whether deletions are instant and irreversible and they told me the usual thing: repositories are not instantly deleted so they could restore them in case of accidental deletions. In addition they stay around in backups for an indefinite time.
Legislation not known well enough and no control over the removal of my code from their machines - call me paranoid, but these are good reasons not to upload my code to them.
Sure, Github can lose data. And you can lose data. But the advantage is that you and Github are much less correlated; the odds that both of you will lose the data at the same time are fairly low. 
Data safety is all about fighting correlation. You don't back up one partition to another on the same spindle, because when the drive dies the whole spindle is lost. Paranoid people back up to two different drives, two different disk controllers, two different machines, two different datacenters, two different continents...
 But nonzero. It is worth thinking about the scenarios.
Agree 100%. Furthermore, it's important not to conflate version control with data backup. Although they share some traits, they have different goals. For example, if I lose my local working copy of a repository before any commits, I've lost valuable work. In absence of a good backup strategy, the existence of the remote repository is of little consolation.
I agree and disagree with you in equal measures. Paying github is no protection against github messing up, in the end you are still responsible for your data and any subsequent loss will be your problem, regardless of the cause of the loss.
So github can be a part of a backup strategy but it isn't a strategy by itself.
Likewise, there are plenty of parties that wouldn't dream of storing their data in a third party repository, it could be compromised, there are at least 'n' github employees that now have access to your data etc.
So there is a need for both options, one where you outsource your headache to github and keep a couple of local copies just in case, another where you do have your own repository that you control with the associated backup mechanisms and a number of off-site copies.
Fortunately github makes it easy to do the former and git itself can make it (relatively) easy to do the latter.
For plenty of people the first is enough. For me it wouldn't work, so I'm really happy this got posted.
Daily, weekly and snapshot backups with Linode are $5 on top of what I'm paying them anyway (and just a few clicks to set up). That's less than the cost of GitHub's micro plan and I can have as many private repos as I want.
I love GitHub and I'm sure they'll continue to do well, but running your own Git server is only going to get easier. If you don't need the social side of what they offer, hosting yourself makes sense.
I did this with my university project source code. The only difficulty is that Gmail does not allow executables even within a zip file. You have to work pretty hard to avoid getting them into your repo.
Or even theft. I lost more than a week's work last year becuase a team member had his laptop, external harddrive, and desktop stolen from his house while he was visiting his parents for Thanksgiving. Whoops. Triple backups don't count if they're all in one apartment.
You have to have backups on server anyway. And setting offsite backups to amazon s3 is like 30 mins of work and may be $1 per month in s3 costs. and this will backup not only your git repositories, but the whole server.
You should already have those things in place for your server. I don't think that the marginal cost of managing git is much if you're already managing a database, web server, application, mail server, and so on.