can I use time capsule to restore my computer?

Dear Friends,

Until recently I used a Iomega external disk to backup my Imac with Time Machine and, when I bought a new one computer sometime ago, connecting this drive to the new Imac was all I had to do to have not only all files but also all my software installed on the new machine.

Now the Iomega disk began to fail and even though (after a long while) the computer will eventually detect it, the backup operation always fails so, before anything else even worse happens I bought a Time Capsule unit instead and I am about to make my 1st backup.

My question for you - more knowledgeable friends - is this: Will I be able to reinstall everything (applications included) on a new computer by means of the Time Capsule should the worst come to that, like I did already with this Iomega disk?

I will apprecciate your comments on the above, the reason I'm a bit uncertain s that time capsule is not just an external drive but also an airport base and whatnot...

Cheers

JV