Thanks for the responses.
First, yes, RAID 1 is a better option than ghosting for main OS/Application drive. Here is how I see the pros and cons on that:
Pros: Redundancy, so if a drive goes down I can still use the computer but just need to replace the other drive to retain redundancy. Saves me the hassle of having to ghost the drive every so often and the risk associated with this approach, such as changes since that ghost will be lost.
Cons: Cost - an extra drive. Complexity - twice the failure rate since two drives. And then even risky if the RAID melts down. I am hearing that one should not rely on motherboard based RAID but I don't really want to get a dedicated RAID card. Still need a back up, a ghost. Also, some performance hit for mirroring. We could all speculate on whether it is significant but nonetheless it would be there. I am not a RAID expert but I guess it would only seem to be an issue with writes.
So I am mixed about this approach. To do it right I guess one would mirror and then back up. I think I am willing to manage some of the risk. At this point I am leaning toward one drive and backing up. The issue is where. The risk is more around inconvenience, i.e. if the drive fails I must first reinstall the OS to get to the ghost image. I might accept that risk.
Regarding the comment about RAID not being a backup. I agree. Possibly I will back up the OS/App drive to an external drive as well. This way I have two copies. I think I would be able to automate this each night to minimize the risk associated with changes since last backup.
But regarding my data RAID. I might have to accept the risk of failure here. I will have up to 750 GB of storage space and I am not sure there is much I can do right now about backing that up. Too expensive at this point but will monitor. I will have to decide what data is valuable and store on an external drive.
Now, the size of the OS/App drive. I think I will go for the 150 GB. Sounds like you feel I may need the space.
Thanks for all the responses. Very helpful. Stilling thinking about this but both of you have given me something to think about.