That's basically how you do it. I would add that you should pause every player slot and quit the game before backing up the files, so that they won't continue to "age" while they sit there. Pausing them eliminates the time setting difficulty.

Also, there are backups of the savegame files in that folder, as well. They are the files names Isola221.ldw through Isola225.ldw. Those can come in very handy under certain circumstances.