Yes, it does, much better than the Symantec products do as they can sometimes have some sort of spanning issue when the images extends over 2Gb at least on the large Seagate USB drives we've tried. Your main concern there is if some malware comes along and wipes your local drive along with the server, then your backup is gone too. Backup to image then image to tape is what we do, which gives us the best of all worlds.
USB drives have to be reformatted with NTFS, or large backups fail due to their file size. I routinely backup 20 gig images to 2.5 inch USB drives. They get rotated offsite just as you would with tapes.