We are discussing running an esx 3.5 server with all vmfs storage on locally attached disk rather than a SAN. Does anyone have any recommendations regarding configuration? We are thinking RAID 5 array.
RAID 5 will work fine for your local disk. Having used local disk in the past, I would strongly recommend a SAN of some kind if you can afford it to take advantage of the HA and DRS capabilities. Either way, enjoy!
Raid 5 would work well, but consider using san... even if you throw a bunch of disks into a whitebox and use something like openfiler to present it as iscsi, this way you can take advantage of the more advanced features.