well, presuming you are using some server backup software such as veritas or sabre it will have a SQL 'agent' component, and within that part of the GUI, it must be configured to truncate the logs somewhere, or do a log backup, this option needs to be turned off.

You need to consider whether you want the server backup to include 'hot' (or online) backups of your databases, it all depends on your DR strategy, and the process you plan to use to recover the server. Will you rebuild the system databases and restore from backups using SQL utilities or rely on the server backups. Check on how the tool recovers the databases, chances are you still have to restore the databases and do some sort of system database recovery but from the server software backup tool GUI.

Whatever method you use I would always still have backups on disk, It keeps db recovery under DBA control and enables fastest recovery of individual databases from disk.

A good trick is whenever you upgrade SQL, and the instance is down anyway, copy your system db files off to another directory. Then these files will get backed up by the server backup and restored in A DR situation. You can then move them back to their proper location, the instance will restart and you can bring the databases up to date from your backups