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stand to be corrected, I've never had a drive fail on my servers
Me neither, but risk mananegemnt is about Probability and Impact. So Its a low probability (higer on drives 2+ years old) but a very high Impact if it happens.
If a power supply blows that would take longer (no extra power supplies kicking around) so I've gone redundant on that.
If losing a couple of hours of data or that amount of downtime is really going to affect your business (and in many business, I don't think that's really the case) then I'd probably be looking at something like a seperate failover server.
In short, look at every piece of hardware and ask yourself - if it dies, how soon can I get it replaced? what's the likelhood of it failing? and how much am I willing to pay to lower that time? For me, if the entire server disappeared, I'd be back online likely the same day.
I can speak from experience when I say the greater danger is plain old user error deleting files :).
They go hand in hand, if the site is Ecom and you are down, then you arent making any money. Ask youself, how much will I lose if Im down for 1 day? Then how much does an extra Harddrive cost for the Raid 1 setup, typically you'll find that the extra drive cost is minimal compared to a days earnings.
I always use Raid 1, and backup offsite aswell. Redundantcy, Redundantcy, Redundantcy. I live by that and survive because I do. Raid 1 is a great idea, and wouldnt think twice about it, always do it.
As far as Raid 0 goes for the speed, I reboot my Server, and start clicking away and compared to being up for like 2 months the difference is minimal. If you look in your Images folder and see the size, its what maybe 100mb? That can easilly be cached in the memory, same for quiries etc. On a static site I wouldnt see any noticable speed increase from Raid 0, ofcourse this all depends on file sizes and many many other factors.