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The difference is that using software-RAID the harddisk has to be addressed directly. That puts more load on the bus. You can see this effect by using big RAID-5 arrays. One i/o-operation must be send to every single harddisk of the whole array plus the additional i/o-operations for parity. Using hardware-RAID only one i/o-operation will be send over the bus.
Yes, I agree with this, but it just seems a little nit picky now. Sure the bus is not unlimited, but are you really going to flood it or come close with this added traffic?
It surely depends on the set-up you have and the purpose. For me, I'm fine with a software-RAID at home. I know that I won't have an unpredictable high i/o-load suddenly and no high i/o-operations in general. But this might be different if you don't know the users operating on the system or if you move big files (movie editing etc.) yourself. I don't, but it might be something to consider though.
Real life example: a friend of me does video-editing. He has a Mac with a software-RAID running Final Cut Pro. Last time he edited a video the software suddenly told him "Your drive is to slow, I'll quit.". So it can happen. But I must admit, it was the first time I heard about a real life example. I guess the Mac-GUI played also a role here.
Using RAID for backup is far from 'failsafe', it merely tackles one cause of failure; What if a major natural disaster tore through your data centre?
Ideally, for critical data, you'd want offsite backups in entirely geographically diverse locations for true redundancy.
Software-RAID can indeed cripple a system as other people have stated, so if you have the money spare, opt for hardware-RAID when possible.
I'd recommend hardware raid especially running raid 10.
I have never had any issues with software raid, but have always found that hardware raid is a bit faster.
Like everyone is saying, if your RAID card isn't top notch go for software RAID.