I say both are necessary when flashing roms
An Nandroid backup is good to restore your phone to working order if something goes wrong. it will restore to its original state that you backed it up on. It saved me once when i flashed a bad file.
TI backup is for restoring apps after you flash a new rom which is very useful since it can save your user data (angry bird levels, settings, etc)
As for space, I just recently went into my clockwork folder on my SD card and i had 5 backups total, which i deleted 3 of them saving me over 1.5gb on my sd card!