Hey Doug,
A quick note before I begin. All the following are just opinions -- mine, with no intention to start a debate over SCSI vs IDE, etc, etc,...
> I am setting up a server (web proxy/gateway/webmail/website) for a non profit institution serving 1000 users
Personally, I would use an IDE RAID controller, since this is a NPO (non profit organisation). You mentioned they have funds for an upgrade now, and although I know not what is the nature of your NPO, I believe the extra funds might be better used elsewhere. Adaptec's 2400A IDE RAID controller will allow you to use up to 4 ATA-100 IDE HDDs to form a RAID pack (you could specify it as a 3 drive RAID 5 Array with one hot spare or a four drive array - up to your discretion). I think you could have more than one controller in it at the same time as well.
> would like to use a RAID 5 system for security and SCSI as its quick.
I agree, ULTRA-160 RAIDs are quick (depends on controller

). But, my opinion on NPO is as above.
> If i buy a SCSI RAID card does that provide the SCSI and the RAID or just the RAID? Do I need to buy an Ultra 160 SCSI card and a RAID card or just an Ultra160 SCSI/RAID card?
Depends on what you need the additional SCSI channel for. A SCSI RAID controller can usually also control other devices like Tape drives, but I personally prefer to have the other devices on a SCSI card of their own. Of course, yuo could by a multichannel RAID card and have the other devices hang off the other channel. I think it's cheaper to hang the others off their own SCSI controller though.
> Any advice or suggestions on a card(s) would be very much appreciated. I would like one with an on board processor if possible. I plan on buying 4 IBM Ultra 160 SCSI hard disks. So is a one channel card suitable?
I have worked with Mylex, Adaptec / DPT RAID Cards. All the models I have used come with on board processors (usually i960 StrongArm processors). One channel is all you need to set up the RAID array. Buy more channels if you want better performance / fault tolerance (and if you can afford it) - for that matter, buy more controllers for fault tolerance. Irregardless of the on-board processor, you will still need a driver for the card. The exception being SCSI-SCSI RAID controllers (which are RAID controllers in a box / card that connects to the PC via a SCSI controller in the PC). However, you still need a driver for the PC SCSI controller anyway ....

.
Hope this is useful to you.
Kelvin