I finally fixed the problem (didn't want it to stop me upgrading to iOS5!).
Anyway, looks like the issue was an app I have installed called "Offline Pages". I had saved on my iPad quite a number of websites for offline reading while on flights.
The amount of data stored for this app must have caused something to fail in the backup process as when I deleted all the app's data my backup started working again.
Bit of a pain losing my config for this app, but better than having to start completely from scratch!