I am not really sure. We have had some problems with iPhoto and, to be quite honest, I no longer feel confident about using this software and organization system as a mainstay for archiving our digital images. Flickr seems to be a better approach but even then it is obviously sound practice to back everything up to CD. The problem with iPhoto is the way images are filed - a very complex folder system that essentially files everything by date uploaded (or the EXIF date taken if available). So, if things get corrupted (the infamous grey thumbnail problem that is clearly quite common else Apple would not have a dedicated help page for it) it takes forever to reorganize the images.
I quite like Photoshop 7's browse facility and I am sure Photoshop CS offers an even better solution. But in the meantime I think we are going to use Flickr as the main storage facility with CD backup. The comfortable feeling about this is that the images will be stored at two discrete locations so should there be a catastrophe. . . .
And Flickr does mean that images can be easily shared with friends, family and the great unwashed beyond!