I've used Windows Backup for a 2000 to XP migration without any difficulties. With the proper settings, it will handle permissions splendidly, and will even gather the elusive PST files in the Local Settings folder.

With 800MB+ PST files (some exceeding 1 GB!) around this email-centric customer base, gathering up Outlook's (brain-dead default) folder of PSTs is essential.

Side note: consider emptying or omitting the Temp and Temporary Internet Files folders when you do a backup. You'll save a few hundred MB in some cases.