For mixing MP3s I use Traktor Dj Studio 2.6 (might upgrade to version 3 soon). I use Final Scratch 2 as my Vinyl controller. (www.stantondj.com)
For mixing music video's I use Virtual DJ 3.2 (www.VirtualDj.com) and Hercules Dj Console as a controller.
For Karaoke I use Winamp with a Karaoke plug-in to play MP3+G. I'm looking at using KaraFun 101b soon (www.karafun.com)
So what about Djing from the computer....? Software crashes do happen, but not too often fortuately. I have a spare laptop as a back up, plus I have a few CDs and all my music video's on DVD just incase anything does go wrong which usually gives me enough time to sort the probelm. Yes I have had hard drive's die. But luckily never during a gig so if I keep the MP3s, Music Video Files, and Karaoke files all properly backed up it's not too big a problem.