Those methods aren't really apples-to-apples:

- spsbackup.exe backs up everything in the database specific to SPS and is
somewhat portable when doing a restore.
- SQL backup  backs up everything in the chosen database, but is "dumb" about
SPS. It can however do things like incremental backups which require less
storage.
- system backup software  picks up everything (including any customizations done
on the file system, or files referenced in SPS that are stored in IIS), but
won't get the SQL stuff unless it's SQL aware (either by design or through admin
scripting).

So the answer is what is "best" depends on the specific type of failure you are
trying to recover from. There is no one of these that does everything.

Does the Sharepoint backup  utility do everything? I'm looking
for the best backup method  to use that will provide us with a complete
backup to restore  from scratch.

It does everything that's actually stored in SharePoint - it won't pick up
things that are added to the filesystem (like site templates added via stsadm)
or custom images and icons not stored in a library.

Afraid to say the point is the only option for complete restore  is a system
backup that's tweeked to make sure it picks up SQL correctly. The other backups
are optimized for specific recovery scenarios (e.g. spsbackup  if you aren't
going to restore to an identical hardware/software environment, smigrate if you
need to move a site between servers, SQL for moving from one SQL server  to
another easily, etc).