From my experience spending way too much money on PCs, configuring servers for businesses, and server application development, my recommendation if you want to allocate $500 for drives is this:
1) Ignore the user talking about RAID 5. It's slower, not faster than RAID 0
2) Realize your PC is for gaming, and thus redundancy is not a real issue. Just backup your PC from time to time. Especially after a fresh install, so you basically never have to setup your drivers again (assuming you keep the same hardware) Realistically, if you have decent hardware, your risk of crash is low, and your inconvenience should be low, too.
3) Consider either RAID 0 or RAID 1. Both setups on decent controllers will give you excellent read speeds. RAID 0 will be much faster writing, but RAID 1 will let you have a drive crash and not bother re-installing, just put in another drive and rebuild your array.
4) You will likely need to make a boot floppy for the RAID controller on your mainboard or whatever RAID card you choose to use.
5) Assuming you don't plan to do any immediate video editing, if you can squeak out 2x 150GB raptors, and a decent SATA 2 RAID controller (even if it's onboard), you should be set for a while. Even video editing would be okay, as long as you don't keep too many files on your drive for no other reason than the odd chance you might need it. Even SATA 1 RAID would be okay, but SATA 2 RAID has command queuing, which you may not really use much in gaming, so it's not too critical.
6) Another option would be (if seek latency isn't critical), you could go for a RAID controller that supports 4 drives, and get 4x 300GB 16MB buffer SATA Seagate drives.
7) Bear in mind that filling up your drives decreases performance because you start running out of space on the outer edge of the drive, and go towards the middle which spins at the same RPM but less speed (like standing in the middle of a merry go round instead of holding onto the outside for dear life)
I hope this helps,
John