It creates a new folder. The Directory of the folder is odd though. Mine's is:
PS3 -> Export -> BACKUP -> [Weird folder name that seems to reference the date of the backup. It's pure numbers and starts with 2011]
It backs up everything but trophies. Sync your trophies and no worries though.
EDIT: I don't know if the back up feature has improved since I last used restore back in 2008 but if you're like me at one point and placed your pictures, video's and games into special albums, that information isn't restored. No worries about the music but after tthe others get restored and you change the grouping settings to your created albums, everything just gets lumped together in one big folder. I stopped bothering after I found that out and just had the games displayed in folders by system format (PS3, Minis, PSP, PS One).
4 ≈ One
