I would also recommend against compressing everything together into a
single volume... especially when writing to optical disks.  It's just
far too likely that the media going bad (scratched, whatever) causes
corruption somewhere - it's much better if that only prevents you from
getting a couple of files back, rather than making it difficult to
recover the entire compressed volume.  I don't know how well tar deals
with corruption in the middle of the archive.  Maybe its really good,
and my concern is unfounded, but I know my way works :)

Plus, in practice, most of my big files that take up tons of space
aren't compressable anyway.