Hi Gregg,
It really depends on what his needs are. Basically, Time Capsule is available in a 500 GB or 1 TB configuration, and the reviews on the Apple website are all over the place. Seems like people pretty much either love it or hate it.
As far as networking goes, one of the functions of Time Capsule is as a wireless base station. It combines wireless capabilities along with lots of storage space. So if your son wants to go wireless for internet access, not only will this product do that , but with the built-in features of Leopard, he could back up his hard drive on the iBook to the Time Capsule wirelessly. In theory, that is.
More on what this thing does
hereMake sure you click on the "reviews" link.
Personally, I don't mind connecting up to the external Firewire drive to back up, and I don't know if Time Capsule can actually be a bootable drive, which is one of the most important features of having an external Firewire drive. From what I see on the specs for the Time Capsule, it won't function as a bootable external drive.
HTH,
Chris K