I currently have a raid5 setup using hardware raid. Like Dan said, software raid will incur a performance hit and though hardware raid cards can be expensive, they're pretty cheap if you go for used hardware. I picked up a proliant 2/p card on ebay for about $20. An excellent card by any standards, a 2 d/h will run closer to $50 or so and is the next generation in the same product line. The 2/p has a 4 meg battery backed cache and the 2d/h has a 16meg battery backed cache. Both cards are dual channel raid cards, one array internal and you can add an additional external array later if you run out of space on the internal drives. I believe either will burst up to about 120MB/s (until the cache is cleared - i think) but their average throughput is 40MB/s.
Setup is a pain as the compaq setup CD won't work on a standard PC but it can be done if you're willing to go through the hassle. BTW: I also tried an adaptec 131U2 and another one that didn't work out. Aparently with these cards, though they support hardware raid, the driver being used is critical in making the hardware raid work and I couldn't get either going properly.