There is a lot of FUD and confusion going around regarding restoring files in Windows Vista Home Premium.
I have Vista Home Premium and I backup and restore just fine. In fact I can prove it with a flash demo.
Now what Home Premium cannot do is the file shadow copy.
One thing that is a little irritating if true is that, according to this site Vista Home Premium is actually doing the shadow copy but keeping you from doing shadow restores by leaving that bit of the UI out. That I can't really prove with out going to Vista Ultimate which isn't likely because of budget issues.
Update: I've thought some more about this.
Vista does shadow copy in the home versions. That makes sense because that is how it's new back up system works. There is a very technical video on Channel 9 if you want to learn more about it. Non geeks will probably not get much out of that video. Essentially once the initial back up is done then they only worry about the changes. You don't get that info without some kind of shadow copy service running.
Yeah tiered pricing is lame. Not including this UI is like the car that is wired for an iPod or cd changer but doesn't come with one unless you pay for the addon trim package. Not sure that car sales is the best model for software to follow.