Will RAID 00 give a performance increase over RAID 0

If the controller will allow you to provision a 10-disk raid 10 (rather than 2 8-disk units with 2 disks left over) that would probably be the best bet. It's simple to manage, you get good write performance with battery backed cache and the RAID card does all the heavy lifting, monitoring, management. Just install the RAID card's agent in the OS so you can reconfigure and monitor status from within the OS and you should be set.

Putting everything in the care of the RAID card makes the quality of the software on the card the most important factor. I have had RAID cards which have crashed causing the whole IO subsystem to "go away" and requiring a server reboot, I've even had instances of a card completely losing the array configuration requiring either it to be carefully reconfigured from the console or the whole thing to be restored from backups. The chances that you, with your one server, would see any particular problem are low, but if you had hundreds or thousands of servers you would probably see these kinds of problems periodically. Maybe newer hardware is better, I haven't had these kinds of problems in a while.

On the other hand it is possible and even probable that the IO scheduling in Linux is better than what's on the RAID card so either presenting each disk individually or as 5 RAID 1 units and using LVM to stripe across them might give the best read performance. Battery backed write cache is critical for good write performance though so I wouldn't suggest any configuration that doesn't have that feature. Even if you can present the disks as a JBOD and have battery backed write cache enabled at the same time there is additional management overhead and complexity to using Linux software raid and smartd hardware monitoring. It's easy enough to get set up but you need to work through the procedure to handle drive failures, including the boot drive. It's not as simple as pop out the disk with the yellow blinky light and replace. Extra complexity can create room for error.

So I recommend a 10-disk RAID 10 if your controller can do it or 5 RAID 1s with LVM striping if it can't. If you test out your hardware and find that JBOD and Linux RAID works better than use that but you should specifically test for good random write performance across a large portion of the disk using something like sysbench rather than just sequential reads using dd.

I think that "The LSI card does not have a BBU (yet) so write-back is disabled" is the bottleneck.

If you have UPS - enable the Write-Back.

If not - try to get the BBU.

If you can't - you can either risk the data consistency on the virtual drive by loosing the cached data in case of power surge if you enable Write-Back or stick to these speeds using write through cache.

Even if you align the partition to the logical volume (which is normally automatically done by most modern OSes) and format the volume with optimized cluster/block size big enough (i think it should be 2mb in your case) to get all the drives to process the single IO request i don't think you will achieve very big write performance difference.

Because the write performance of the RAID5 is very over-headed process. And since it is write through the XOR processor don't have the whole data in cache to perform the parity calculations in real time i think

With Write-Back enabled cache on 4x320gb hdds 515kb stip sized RAID 5 i get average 250-350 MB/s write speed writing big sequential files or average 150 MB/s copying big files inside the virtual volume. (i still don't have BBU but i have and old apc 700VA smart ups so i think its enough to minimize the power surges and eventual cache loss to a lot)

Are we discussing 100% random, 100% sequential or some mixed pattern? I am mostly experiencing high speeds when i fully read, write or copy big files on/from/to my array. On the other hand as already said random writes (reads) are much lower variating from less than 1 mb/s up to 190 mb/s average speeds depending on the file sizes and/or request sizes. Mostly under the 20mb/s range in everyday small size/file uses. So it depends a lot from the applications in the real life random transfers. As i am using windows OS my volumes are pretty mush as de-fragmented and for big files big operations like copying from/to are pretty fast

And one suggestion as a solution to the slow read/write random speeds of normal hdds - if you get to the point of reconfiguring your whole controller configuration why don't you consider CacheCade using 1 or 2 of the SSDs for no-power-dependent raid cache (something like the adaptec hybrid raids) and the rest for your OS/app drive as you are using them now? This way you should be able to boost the speed of your raid 5 volume even with write through i think because the actual write to the physical hdds should take place in the background and as you are using write through cache (no on board controller cache) and the ssds as cache instead i think you should be worry free of system resets. But for actual and concrete information on how cachecade works please read lsi's documentation and even ask LSI's technical support as i haven't got the chance to use it yet.