I am looking to implement a simple project that backs up files and encrypts them using AES.
The normal backing up part is done thanks to how Python handles everything ... however I need to encrypt the data also.
So my questions are:

Is AES the best encryption algorithm for encrypting the files or I can do better?
What is the best Python library for encrypting stuff? I searched and came across M2Crypto and PyCrypto. Any differences/ which one should I favour?
Is this going to be secure? I mean, I will be typing the key everytime I need to encrypt / decrypt and so I will be getting the key from raw_input. Is this OK?

If you have any suggestions, feel free to let me know.
Thanks.
Ideally, you would not be at a cipher level in order to secure your data. If nothing else, use an existing, proven secure, framework such as GPG to handle file encryption. This is driven home by your question regarding AES: you haven't even mentioned what cipher modes you were considering (CBC, XTR, CTR, CFB, EBC, etc).
AES encryption of files with Python