Hardware RAID vs Software RAID

My situation...

I was running a four 500g drive RAID5 array on an Adaptec SATA RAID
controller (Two, actually, second is fine). One drive failed and then the
replacement failed during the rebuild. The array has been verified that it's
trashed. Very little hope of recovering my data without spending more money
than it's worth.

The Adaptec controller (21610SA) is older tech... PCI-X, 16 SATA ports, 2TB
array limitations, etc. This controller seems to work OK, except that it did
not like Hitachi drives and trashed the array when the infamous Seagate
firmware issues started happening.

I have now obtained an LSI 8408E controller... 4x PCI-e, 8 SATA ports,
battery backup. This controller should perform better than the Adaptec. It
probably won't handle the Seagate issue much better though.

At this point I'm trying to decide on whether to use the hardware RAID5 on
the LSI controller, or just use it as a SATA controller and do the RAID5
with Windows disk management.

Pros and cons for each method.

+ LSI should have good performance
+ LSI can manage and resize arrays
- LSI is limited to 8 drives (Can you chain LSI controllers to make a larger
single RAID?)
- LSI requires another LSI controller should my current controller fail

- Windows can't resize it's RAID arrays (BIG minus)
+ Windows can RAID from different sized drives and still make use of the
left over space as seperate partitions.
+ Windows RAID can span multiple controllers, allowing for as many drives as
I can mount in the chassis
- Windows performance will be slower
+ Windows array should be easier to relocate should the PC fail

The OS on this PC is Windows 2003. The drives that will be going into this
PC a

(2) 1TB WD SATA drives -
(1) 500gig Hitachi SATA -
(9) 500gig Seagate SATA, mix of 7200.8, .9, .10, .11 -
(1) 500gig WD SATA -
(1) 320gig Seagate -

My chassis has room for 14 HDDs and an optical drive. PSU is large enough to
support that many drives.

At this point my plan is as follows (and I'm looking for any feedback
regarding this):

(8) 500gig Seagate in hardware RAID5 on the LSI controller
(1) 320gig Seagate as the OS drive on mainboard
(1) 1TB WD as a backup drive for anything important on the RAID5 array on
mainboard
(1) 1TB WD drive for non-important data that does not exist on the RAID5
array on mainboard
(3) other 500gig drives (Seagate, Hitachi, WD) for ???

I could use Windows RAID5 on the three 500gig and use that for the important
RAID5 stuff. The two 1TB could be used for non-critical data (Music, etc.) I
could also just keep on 500gig drive unhooked as a spare for the LSI array.

Does anyone see any other options I should be considering?