Most large companies use offsite disk-based backup systems or a mirror of their production environment at a recovery site. Modern tapes can store a *lot* of data, but you have to factor in restore times.
Even a 400 GB drive isn't very practical. In anything other than a desktop environment, you'll probably want more than one spindle working on your data. Seven to a hundred or more spindles (sometimes thousands) is common for SCSI subsystems, and fiber channel subsystems can scale way beyond that.
So, unless the interface technologies continue to advance as well, increased capacity is really only helping PC manufacturers, game players, and DVD rippers. ;-)
Trev