Of course it will effect performance. But I wouldn't worry too much. As to preventing problems, then it depends. Because *everything* that happens to disk 1 will also happen to disk 2 (because it is a mirror), then anything bad that comes from, say, a virus or adaware, will also happen to disk 2. You will *still* need to use a backup to get it back to a previous state. Once the RAID 1 is installed it will look like a single 120Gb drive. What RAID 1 should protect you from is if one of the drives crashes because of a hardware error. The other disk should be fine (unlucky if both go wrong) and you can carry on with that until you replace the other drive. But my point is how often do you get a HD hardware crash on modern disks? If you get a lot then do you move your computer around a lot or live in a really dusty area or something?
Personally I use RAID 0 for performance, then backup onto another HD every now and then. With the price for a new HD being stupidely low, then this isn't an issue.
As to PSUs, my machine started rebooting randomly a while back, and I tracked this down (web searches) to the PSU not handling things (new GPU, RAID 0 array etc, all in a week). PSU was something weedy like 250. Got the highest I could get, and got a 650 watt gold plated 3 fan effort (not that noisy) just to be safe (lots of peripherals). Works fine now. Cost about £45 from Dabs with next day delivery (£30 without), so hardly breaking the bank.
Cheers
I am 99% probably lying in bed right now... so don't blame me for crappy typing