You should always have really important files backed up on some media. Generally, a full backup is impractical. I would advise setting a restore point in case something goes wrong.

I usually read 'turn off all programs' to mean close any programs you are currently using (browsers, word processors, etc.). I don't think it means to stop services, etc.

However, if you are running anti-virus or firewall programs, might be a good idea to temporarily stop them, just in case they might interfere with the install.