The velociraptor will be faster with things like booting and non-sequential I/O application performance, so overall its faster since its a pretty fast drive, for a HDD.
The ultimate "system drive" would really be an SSD, and it doesn't have to be really large since it just needs to hold your OS and (optionally) your applications/games, but not data files! Store data files on preferably large HDDs. For example you can buy an SSD + WD Green 1TB for both performance and reliable storage, keeping your current RAID0 of 250GBs. The cheaper option would be a velociraptor + HDD. But don't buy 250GB drives, they consume alot with little storage; buy 500GB/640GB at least, and i recommend the 1TB WD Green series.
I actually was considering an slc based SSD, but price is a variable here and I don't have the money to afford that. I was looking at the mlc based OCZ 32GB SSD, but windows 7 + WoW + Age of Conan + Warcraft battle chest + Starcraft 2 = no room left and much less performance.
If I had the money I would buy a velcociraptor and use it as my primary and buy a power efficient 1TB HDD and use my the two drives I have in raid in an older computer.
You can wait a little and buy the new Intel X25-M G2 (34nm). This one is cheaper than the previous that used 50nm flash memory chips (bigger chips = older technology). So the new 34nm SSDs from Intel are cheaper and prices can go down a little as they settle.
Note that currently Intel is not selling their G2 SSDs because of a minor problem which will be corrected with firmware. This problem affects only people who set BIOS passwords, and few of us do. Nevertheless they aren't selling them anymore, although there is still stock of the first product badges that got through. My recommendation is to wait if you're inclined to buy, for about a month or so.
If the price would go down to $175, two 80GB Intels in RAID0 will cost you $350, which is not unreasonable. You can buy one 80GB SSD now, and decide to buy another one later when prices are even lower, and connect them in RAID0. Note that you will loose what was on the disk, so it will cost you some time backupping and reinstalling.
Anyway, if you want a real noticeable performance gain at the I/O level, SSD is the way to go. And with the intel price drops, its even cheaper than its "lesser" rival OCZ Vertex.
Be warned for older controllers using JMicron JMF-602 SSD controller, like OCZ Core and Apex series and also some other brands. Avoid these as they are quite bad actually except for reading. But their writing is so poor it can cause "stuttering" behavior; when the system appears frozen. This is no issue with good SSD's like the Vertex and Intel X25-M.
Pairing the low capacity of your SSD with the large capacity of a WD Green 1TB drive is very good. The SSD is for performance, the WD Green for mass-storage. Note that streaming a video or listening to MP3 does not require fast storage at all. All this is buffered so really any HDD would be fast enough. Fortunately the WD Greens are quite good at sequential reads/writes, even though they are only "5400rpm" drives, but with high-density platters making sequential transfers quite fast, for in cases you copy alot of data.
I posted this pic in a related topic, it shows the ideal performance gains when using an SSD. Note that not all games scale as well as WoW here. But its a popular game and its loading times can be really important because of the player-versus-player aspect of this game; giving the SSD user an advantage because he enters the instance quicker, allowing more preparation time in certain circumstances.
Thanks for the pic, it really puts things into perspective.
I am starting to think that I might actually wait out for an SSD option. I was particularly looking at the Seagate 1TB 5900 RPM hard drive since it features low power consumption without much of a performance hit (I'm a Seagate fan if you didn't notice - I swear by them).
What SSD do you suggest that won't break the bank?
EDIT: I see now which SSD you suggest, but are there any others I should consider?
Not really, as the Intel is now cheaper than its "lesser" competitors, there is no reason to buy a Vertex drive if its more expensive and slower than a good Intel 34nm drive. In full its called "Intel X25-M G2 80GB", the G2 signifying the second generation of the drive, using newer technology to produce the flash chips, meaning more of them can be produced from one "wafer" and thus the price goes down. So this G2 drive is cheaper than the first generation X25-M drives from Intel.
You may wait a bit for them to become well in stock and prices settle, if you can get it for $175 that would be a great price i think. And with 80GB the storage space it certainly had adequate space for a system disk.
With the new Intel firmware that's not really an issue anymore. But you should always leave something free, so random write performance doesn't suffer. If there are too few free blocks available, it will become slower when writing.
With Windows 7 and the TRIM function, the SSD maintains its high performance level and doesn't degrade performance over time. SLC controllers will have an easy job here, because MLC requires more work and smartness to avoid high latencies.
Honestly, i can't see a reason to buy the Intel X25-E at this point, its beaten by the X25-M in random I/O and that's the most important thing. The latencies are virtually the same and the price of the G2 is ALOT lower than the price of the X25-E series.
Just wait a bit since G2 is pulled off the market to await new firmware from Intel. After that it should be available at larger quantities and its price should drop a little too.