@moto:
I use lzx for such backups. Of the top of my head I cannot remember the command line options, but you'll want to recurse into directories, maximum compression (if you need it,) and retain all file attributes.
I make sure that my current working directory is the parent of the directory tree I want to backup, and use #? as my filename pattern.
Follow my advice and you'll probably have to play with a couple of commands to get it right. I'm sure someone will give you something more definitive... I hope! :-D
[EDIT]: Also, test your archive when you're done creating it. That way you can be sure that the file will extract and that you got all the files you were expecting. Playing with the file mask has always been my Achilles heel, as in some programs #? seems to ONLY get files and no directories.