Best way to partition?

Your 20GB may come in handy while installing the RAID controller. After that I would keep it either as a fast backup-device or as an alternative WinXP system disk (RAID 0 is very vulnerable to disk failures)

There is no such thing as the best way to partition your drives. (There are some bad ways to partition the drives).
The main advantage of partitioning is that files are physically and logically stored on different parts of the drives. This may help lessen problems with fragmentation on the drives. It may make it easier to implement different backup schemes for different data on your system. The disadvantage is that each partition creates a drive letter; each partition needs to be managed individually (backup, defrag), and partitions are not easily enlarged/reduced (yes, there is software which can do that, like partitionmagic, but believe me, no system administrator of a mission-critical 24/7 server system is going to like doing that!)

Partitioning may make your system faster, if you suffer from fragmentation problems. If you run a server it is best to keep your database separated from your temp files for example. But partitioning may make your system overall performe poorer: since the partitions are stored on different areas on the drive the head of the drive has to tavel farther.

My favourite partition scheme: one partition for the system + apps; one partition for user data and one or more partitions for servers/databases.
Some people put the Windows page file on a separate partition. There is no need for that if the Windows partition is defragged.

What do you plan to do with the RAID0? If you want to put your OS on it then make one 20Gb OS partition and the 60Gb can be for stuff. Create the array with a 32Kb block size.

An alternative would be to keep your OS on the 20Gb drive (assuming it is pretty fast) and just have the 80Gb RAID array for fast data access.

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In RAID 0 the data is spread over all drives in the array. If you partition the array the partition(s) is(are) spread over all drives in the array. Any failure on any drive will render the whole array unusable and all data lost. So a 2-drive RAID 0 array will double your chances of failure. Now if you follow this forum you'll notice that HD's fail. Not very often. But often enough.

Backing up your data is obviously an option. However, a 2x80GB RAID 0 array has 160GB space; backing up such a volume (completely full) will cost you 220 CD's or 35 DVD's (uncompressed). Plus a lot of time! Backing up to a partition on the array is rediculous. You might back up to a spare drive, but then you'll need that extra spare. Plus an extra IDE controller if you run out of IDE channels.

RAID 1 (mirroring) on the other hand creates an exact and continous duplicate of a drive on another drive. That'll cost you a drive. But chances that both drives will go at once are much smaller. Not zero: the house may burn down, lightning may blow your system. Performancewise RAID1 is slightly slower than RAID 0 when reading, and much slower when writing. (on most systems 90% of transfers are reads)

Performancewise and securitywise optimal is Raid 1+0, but that'll cost you 4 drives. Or Raid 5, that will cost you 1 drive per array, but these controllers are more expensive.