Now I have searched Server Fault and Super User and have seen that some people recommend software and some people swear by hardware RAID, but I am looking to use it on a home server of mine to store all of my stuff.
I have bought a LSI MegaRAID 8204ELP RAID card off eBay and also 2 new 2TB WD hard drives. The PC is going to have a quad core and 8GB of RAM because I will be running Hyper-V on it on a seperate hard drive, so that is not an issue. I have heard that software RAID 1 is, in some ways, better because if the motherboard, PSU, etc, etc fails, I can easily pull the drive(s) out and plug it into another machine and get access to the data on 1 or both of the drives.
On the other hand, I have heard that if the RAID controller fails, I have lost the data on the drive(s) unless I get an exact matching controller.
I have a Windows Home Server machine already and I will be moving all of my stuff off it to this new server which will be running Windows Server 2008 R2 Standard, mainly because of Hyper-V and also it can do alot more than WHS. It's a shame that Microsoft have basically killed WHS by removing Drive Extender, but Microsoft like to rename, change and remove features...