We have lots of Red Hat servers and have considered installing the PSP. The issue always comes down to the errata kernel support by HP versus what's current on Red Hat channels. We had the experience that the Red Hat version of the drivers was more up to date than the one provided by PSP. On another occasion the PSP limited us to a version of an errata kernel, which didn't make us very happy about it. Now, there been times where Red Hat didn't logged messages for issues with the hardware. Which is pretty bad on production servers, having servers go down or hang without any information or logs of the cause is not fun. At this point we have a hybrid, we've picked the packages that don't need an specific kernel version to work; like hp-health, hpacucli and the monitoring such. I think if HP/Red Hat and the rest are so tight, they should work together and include them on the Red Hat distribution. Is nonsense that there is even a support pack independent of the distribution itself.
Maintaining your own distribution is a lot of work. Even if you maintain the backports, you will soon be overwhelmed by security issues to fix, and have to pull low-level libraries to keep updating your software, which might break other things (I maintain servers running 6-year-old distros, it's not fun).
Upgrading is generally a good solution. do-release-upgrade is well made, and you should be able to upgrade without issues (especially if you only used official packages).
My favourite solution though might be the reinstall path. More specifically, your servers should be managed using a configuration management system such as Puppet, Cfengine or Chef. If all your configuration/package needs are specified using such a tool and your data are safe on a separate partition, it's much easier to reinstall quickly. You just install a new distribution without erasing the data partitions, and then run the configuration management tool to reset your packages/configurations. I believe this is the cleanest way to do, especially if you have several servers to manage.
If you are using non-official packages, you might want to identify them before you upgrade/reinstall. maintenance-check can help you identify the packages that are not officially maintained by Ubuntu:
$ bzr branch lp:ubuntu-maintenance-check
$ cd ubuntu-maintenance-check
$ ./maintenance-check -f n
If you want to reinstall, you can also export the list of installed packages:
$ dpkg --get-selections > myinstall.txt
and your debconf database:
$ debconf-get-selections > debconf.txt # from the debconf-utils package
As a note, since you're currently using Karmic, it might not be too violent to upgrade to Lucid, which is an LTS release, still supported until 2015 for the main server packages. This should leave you enough time to setup a viable automated installation for the future.
When you ask about Launchpad packages, I suppose you mean PPAs. There are tons of different PPAs. Some are experimental, some are stable. Some are maintained by official Ubuntu developers, some are maintained by people hardly know how to do a package properly. It's hard to say in general if packages you find on PPAs are good, there's no general rule. The best hint in this case might be too look at the owner of the PPAs to get an idea of the possible quality of their packages.
Best Answer
The only driver that really matters on Dell PowerEdge servers is the raid-driver.
It depends on your specific controller which driver that is (e.g. megaraid_sas, mptsas, ...) and what minimum version is officially required.
Ask dell about the reqired version for your driver. Then the distribution should not matter at all.
I do not know the real reason for this minimum version requirement, since I got a couple of standard-distributions (CentOS 4, RedHat 3, SLES9, SLES10) that have or had older versions - but everything was working great. Anyway I used DKMS with the Dell-provided drivers for RedHat/SLES on those systems so Dell could not tell me the "not supported" stuff.
So my way of installing these drivers was to make a standard-install (I did not initially use the Dell-drivers) and then update the driver. The result was a working, supported system.
With Ubuntu you will never get there - the OS is not supported - but to be sure - take a closer look at the raid-drivers. Apart from that I would recommend Debian instead of Ubuntu for server usage. See this question and its answers...