Is it a good idea to clear out the system volume every now and then?
Well… For security, maybe.
For disk usage, also.
Anyway, do not delete the files directly, but use Windows features to do so.
But the major question is, could you really rely on Windows System Restore?
Sure. 
I for one won’t rely on system restore, many people think it is some sort of magic bullet that will take you back to a point in time where ‘everything’ will be as it was.
The truth is a different story, it doesn’t cover all files nor all areas, so there the unforeseen/unexpected consequences of using it. The major problem is that the user doesn’t know exactly what is covered by it. It isn’t unusual to find that the restore point chosen by the user fails so another has to be chosen, etc.
For me it is the unpredictability of system restore allied with the uncertainty of exactly what it does cover that made me seek out an alternative. That alternative for me has been hard drive imaging software, it is predictable on what it covers and for me in well over 8 years has never failed me.
I run a full image backup every week (keeping the last 6 copies) saved to a second hard drive. I have a small program called mirror that I use several times a day to backup more volatile data, emails, bookmarks, .doc, .xls, image/media files, etc. etc. If you don’t want to lose it back it up and often.
Well, usually it does.
The major problem is that many users don’t give it the space it needs.
But I agree with you that an imaging SW is always preferable.
That is the problem, the word ‘usually’ and that isn’t good enough for me and why I elected for an alternative.
I use a combination. I make regular Image backups in case the
System Restore fails, I have a sure cure.
Since System Restore is much faster, I always try it first and haven’t
had any problems with a restore point except I usually have to re-install avast! 
:o
i havent did a system restore yet…i havnt had any problems that needs a restore ;D
Same here.
What is the windows feature to do it?
How to remove all System Restore points except the most recent one
To do this:-
Click Start > All Programs > Accessories > System Tools > Click Disc Cleanup
Now launch this utility and click More Options tab. Under which click System Restore and followed by that click Clean Up tab a message will popup -Are you sure you want to delete all but the most recent restore point?Click Yes then OK. Finally another message will popup-Are you sure you want to perform these actions?Click Yes.
Now, all the System Restore points except the most recent one are cleaned. As a result there will be more free space in hard disk.
You can also use Ccleaner to remove restore points:
http://www.piriform.com/docs/ccleaner/using-ccleaner/removing-system-restore-points
You can also disable and then enable system restore to remove all system restore points:
http://support.microsoft.com/kb/264887
CCleaner cleans the list or restore points, so they can’t be used after the cleaning, but the files are still left untouched in the HDD, so for the purposes of this topic, that’s not useful enough.
You can also disable and then enable system restore to remove all system restore points: http://support.microsoft.com/kb/264887
This is the simpler and more secure method, cleaning all Restore Points including the last one. In some cases, there is a chance that some files would be still left in the HDD, but it is rare. The only “con” is that it requires reboots; one after the first disabling and one after re-enabling System Restore.
Well disabling system restore (even with a reboot) and manual deletion of restore points would do the same. Effectively all that they do are to remove the file reference from the file table and mark the space as empty allowing it to be used again, but the data remains there until overwritten.
Thanks. 
thanks guys for all the input.
@DavidR,
When you said “would do the same”, I don’t understand. I mean, to which exact procedure you are calling “manual deletion of restore points”?
TIA.
You’re welcome.
Manual deletion could take the form of A) using the System Restore, Creation of a new restore point and the Removal of Old restore points or B) from windows explorer {having changed folder settings to view them} and using the delete function for a specific restore point or multiple restore points.
All that is actually happening is the reference to them is removed and the space is marked as free, the data remains there, there is no function to overwrite the physical data space, no wipe process, nothing, nada.
The data remains until it is overwritten and could be recovered as there ate file recovery tools that do that, some very good ones which can recover some of the data even after being overwritten.
Windows System Restore doesn’t do anything special when you disable system restore; it just removes the references so you can’t use those restore points as they aren’t listed so you can’t select them. It doesn’t run any security grade wipe function to physically obliterate the data.
So essentially it isn’t any different from the deletion of a file within windows the file reference is gone and the space is marked as free.
DavidR,
The description of deletion of files is correct, but there is a little difference in the sense of the list of available restore points. If the user simply deletes the files (which needs special permissions so to get into “System Volume Information”), the list of restore points is left intact.
That is the “mirror” procedure that CCleaner performs. CCleaner leaves the actual files, and deletes the list of available restore points (except the last one). The actual files are deleted (using the usual method as you described) when the system eventually creates new points, while in the meantime the available points are not listed since CCleaner deleted the list (not the files).
The Windows utility for freeing space, or disabling System Restore, should perform both actions: clear the list of available points, AND delete the actual files in System Volume Information (using the usual method you described).
What ccleaner does is hardly minor as essentially it is no different to what has been said, the data isn’t deleted period by any of the methods, just the references.
Unless you go the extra mile and use wiping software the data still remains whatever method you use.
CCleaner cleans the list or restore points, so they can't be used after the cleaning, but the files are still left untouched in the HDD, so for the purposes of this topic, that's not useful enough.
So system restore isn’t actually deleting anything other than the references, so for me nothing different to ccleaner, the references aren’t there so the restore points can’t be used and that really is what I feel is important, to prevent old software and possibly malware being restored.