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No best answer has yet been selected by joelmarc. Once a best answer has been selected, it will be shown here.
For more on marking an answer as the "Best Answer", please visit our FAQ.Raid 1 is disk mirroring (1 controller/2 disks) or disk duplexing (2 controllers/2 disks) and is relatively expensive, plus one disk is redundant.
Raid 5 would be IMO more sensible, as less disk space is lost, also there is a technology called raid 5 plus which allows for two failed drives, instaid of one for raid 5.
Either way a dedicated storage server with a reliable back up system in place would be my advice.
If it is a large network, Network Attached Storage (NAS) might be worth considering, These are Raid systems attached to a network and mapped through application servers,allowing for faster network data throughput.
I have a relatively small amount of users so use a Buffalo Terastation which gives me 750Gb over 4 x 250Gb disks using RAID 5 (though you can use 500Mb mirrored over 4 disks). It's cheap, reliable, small and easy to configure using a web interface. It backs up nicely to USB drives, making offsite backups a little easier. It has good user/group share access controls but make sure you operate it behind a firewall as there is a buffer overrun flaw in its OS.
If you have many users though and/or use Active Directory on Windows Server 2000/2003 it's possibly not the best option other than as a remote backup target.