Depends on if it's an iBook/Powerbook or a Macbook/Macbook Pro. If it's Intel-based, it'll boot off of USB so I'd get a USB 2.0 drive. If it's PowerPC I'd get a Firewire drive because USB 2.0 isn't bootable on PPC Macs but USB2.0 is.
Otherwise, there's no recommendation/limitation. Anything can be formatted HFS+ with Disk Util.
Run /Applications/Utilities/Disk Utility
Go to the partition tab
Click on the Options button
Choose GUID for an Intel Mac, or choose APM (Apple Partition Map) for a PowerPC machine
Use Carbon Copy Cloner to copy the disk
Test it out by rebooting, holding the Option key. You'll see your internal and external drives in a boot selector. Choose the external and click the arrow button (Intel macs have an arrow right below the selected icon, and PPC macs have a sideways arrow button). It should boot right up and everything should be there. If so, your backup is good.
CCC will revert everything on the disk, so yeah, if an OS upgrade goes bad and you backup right before you install it, it'll restore everything. What I don't like about it is that it's manual - you have to start the app and tell it to back up.
WD has some external "Mac edition" drives that come with a Mac auto-backup util. Depending on how you trust your aunt to back up her data, you might want to look at those instead.
I do not understand what I do. For what I want to do, I do not do. But what I hate, I do.