Well, in terms of security, Vista includes Internet Explorer 7 with a protected mode, which means the entire browser runs in a sandbox, and it has no access to the rest of the system unless you specify it (by means of a dialog), here
it's the friendly explanation, and here
the technical details. Of course, you're better with a properly configured browser like Opera or Firefox, with ad blocking and everything, but you can add SpyBot's download blocker, which also serves as an ad blocker (yeah, it's strange, but I prefer doing that than adding 80,000 URLs to the registry <_<)
What else? The firewall now has outbound protection, together with some improvements outlined here
, to me it looks quite better than the one included with XP, and, as we discussed in other threads, it complements the protection of a properly configured router.
It also includes the lovely UAC. Remember that by using TweakUAC, you can rid of the pesky dialogs, while retaining the rest of the security advantages (IE protected mode, etc.)
Finally, it has Windows Defender, while not being SpySweeper or AVG Anti-Spyware, it's a good product, and monitors the usual hijacking locations, while protecting from spyware. A bad point of it is its lack of updates, which are not even daily, sometimes weekly, and mostly you have to rely on its heuristics from new threats protection. It's also lightweight, which I like, but personally I would choose another app if you can AND if you feel like your parents have enough expertise for handling a more advanced app. Otherwise it's adequate, I've been testing it for a month or now, and no infection problems, even after navigating to some questionable sites, but I think I'll settle for another free alternative, maybe ThreatFire.
I don't know about backups