A single drive is always going to be a potential point of failure. Definitely make periodic backups to a different device if you don’t want to potentially lose everything on it without warning.

There are more complicated solutions available, such as a RAID array, but it sounds like you want to keep things relatively simple. In that case, I don’t think there will be a whole lot of difference between 2.5 and 3.5 inch drives – except that there are 3.5 inch drives designed for data center applications which may net you some extra reliability.

That said, there’s only so much you should expect to get out of a single drive connected via USB (relatively slower transfers, reliance on the bespoke external bay, potentially not getting warned if SMART status changes).