Hardware RAID:
Upside: speed & transparency to the OS
Downside: typically controller-specific. You can't unplug your raid drives from one controller and plug into another brand and expect it to work. Costs $.

Software Raid:
Upside: Free (no extra $) if your OS supports it
Downside: Possible performance issue since the CPU has to think about it.

In all cases RAID won't protect you from virii, or human error.

If you must choose bewteen RAID and an easy, complete data backup plan, my money is to set up a backup first. Unless you have 100% uptime needs and can't cope with rework since last backup, set up the backup first.

I prefer NAS devices (roll your own included) over a fast network for backup.

Backup and RAID are complimentary. RAID helps keep your machine up when a HD fails. Backup can save your bacon in the event of a drive failure as well, it just takes longer.

The best solution is to use both. Use backup to save you from yourself, and RAID to keep you up in case of HD failure.

Apologies if I've overstated the obvious.

-Zeke