I'd like to build a cheap NAS with two drives in RAID1 configuration using Linux software RAID. What are the pros and cons of having a separate system drive? My main concern is reliability of the data, I don't require high availability (failure of system drive without compromising the data on RAID would not pose a big problem).
There is no need for a whole system drive, though I recommend separating your OS and your data on different partitions.
Since Linux can boot from a RAID 1 device you have at least these options:
Better performance compared to [part of] 1 drive OS, most of 2 drives for data.
Not compared to 2 drives RAID data and an extra drive for the OS.
I recommend a separate system drive because of the following points