RAID 0 is not a true RAID. It is a cheaper alternative than a SSD. Well it is quite fast, I have tried it with 320Gb, 500Gb and 640Gb minimum of two drive to 4 hard disk - You can appreciate the speed on 4 hard disk then the RISK is real. It is not reliable.
I tried a Western Digital Black or Blue or a Velociraptor it all the same but Western Digital can prolonged the fun with gaming than other hard disk brands. The worst enemy of having a RAID 0 is brown out. Well I still doing it.
Pro: Read and write operations on your computer will occur faster. Cons is everything else. First, there is very little pure read/write that gets done on a computer. Even loading a game or level involves a lot of CPU work to decompress the files. Second, you have the dead drive problem that you alluded to. Third is the even worse "brown out" problem that dEAne mentioned. The loss of data with AID0 doesn't happen when you have a disk die but when your RAID drivers get bonked causing your disks to get corrupted. This can happen during a brown out or other power fluctuation. Because the array can die fairly easily I never suggest putting your OS on a RAID array.
Well reliability issue affects single drives too. And even if you use RAID1 or RAID5 under Windows that's not very reliable either; most windows RAID solutions are quite fragile and thus the added RAID layer becomes a point of failure in itself.
Instead, i recommend to rely heavily on backups, maintained well and synced automatically they can really save your data! Then if something bad happens you should be able to recover from the backup, and vice versa.
You can then use RAID0 to your enjoyment. Do keep in mind it may still give you a performance benefit if you keep the OS on another HDD not part of the same RAID set, a small 40GB SSD might do.
RAID0 scales very good in sequential throughput, and can also scale very well in random IOps; but keep in mind Windows RAID solutions are not that sophisticated; 30% more IOps should be something you can expect. You need a large stripesize for this. Using the Intel drivers with Write Caching enabled gives you performance bonus comparable to Hardware RAID with dedicated buffercache memory, but also puts additional risks on your volume, such as possible filesystem corruption when a crash or power loss occurs.
Try to separate OS from your user data; so nothing on the OS partition is something that you really need. Then you know everything on D partition is what i need; my personal files. That makes it easier to backup stuff.
RAID failures can be due to RAID engine deficiencies, or disk failure. So a problem with your RAID can occur with all your disks being fine. In fact, that's how most Windows RAIDs fail: a bad sector causing timeout and dropping the disk from the RAID configuration, splitting and failing/degrading the array.
If you don't mind losing the data, you can just re-create a new RAID0 array of the same disks or a replaced disk of one was faulty, and reinstall and restore from backup. Note that you can recover your data if you like, in many cases. But ideally your backup should be so good that you don't need this at all.
Defragmenting isn't affected by RAID0; windows 7 should automatically defrag your drive. If you do defrag manually, first delete everything you can delete before doing a defrag. Note that defragging can lower performance as well, because files are stored with more distance to eachother than originally was the case. This is all unrelated to RAID, but the best thing you can do is never to fill your filesystem with more than 75% of data, to avoid heavy fragmentation and performance loss.