I have a Compaq Proliant server with 5x4.3gb RAID disks. I have decided to
configure them to Raid-1 (mirrored set) for redo logs, control files, NT OS,
and oracle software, and Raid-0 for data files (RBS, data, temp, ...).

Now my question is: how many PHYSICAL disks should I create? I know Oracle
recommends as many physical disks as possible. However, according to my
research, some people say since RAID-0 stripes data accross several disks,
there is no need to create independent disks, i.e. one large disks with
several logical drives will be good enough. Which one is correct?

The redo logs write sequentially to the disk tracks.
If you share that read/write head (i.e. physical drive) with any
other function, then you will have to seek back to the redo log to
continue writing the log.

Since you only have 5 disks, you don't have enough distinct drives
to both stripe and mirror the redo logs, and still dedicate the physical
volume to the redo logs.

Do you have a write back cache on your RAID controller?  If so, I think this
helps compensate for a lot of the problems with competing access to disks,
assuming that your disk arrangement can keep up with your overall write
throughput.  I have yet to read any conclusive studies on this though.

I assume you realize that by going with RAID O (no mirroring) for the data
files, you will have to recover the database from the backup and archived
redo logs if a disk fails, so availability cannot be a high priority.

Given that, if transaction performance is the highest priority, I would use
two physical drives in a RAID 1 mirror, with redo, archived redo, OS, oracle
software, and whatever else fits.  I would then use the remaining three
drives as a single RAID 0 volume with the system, temp, data, and rollback
tablespaces, and also the primary NT swapfile (put a small one one the RAID
1 mirror for recovery).  You might also want to reserve a small part of each
disk in the RAID 1 array to be configured as a regular volume for storing
redundant copies of control files, etc.

On the other hand, if you can sacrifice the storage space and performance
isn't a problem (i.e. you don't have a high transaction load), I'd go with
RAID 5 for the three disk array, so that you have some fault tolerance.

John