Hi htc2010, The S300 is a driver based RAID controller. Which means that the communication between the OS and the hardware is in the driver stack. In a hardware raid it is handled on the hardware and the OS is unaware of the RAID and in a software raid the OS handles the RAID, so this is somewhere in between the two. The S300 is our highest end non hardware controller, so if you did upgrade to a different card it would be a full hardware solution. The H200 is the hardware controller that works with the T110. It is a hardware based raid controller that supports RAID 0,1 and 10. 
We have a PowerEdge T110 server running Windows 2003 Standard x86 with a PERC S300 card with RAID5 using 4 250GB SATA drives.  After about 3 years of continuous operation, we are considering migrating to something more robust because we are slightly limited by our 32 bit OS and software setup (there is no x64 migration pathway).  We do not have a huge budget or ability to rebuild the server because it uses proprietary point-of-sale databases and software.  However, we do have control of the hardware it runs on. From what I am aware, the PERC S300 is some kind of option-card or hybrid software/hardware RAID controller with limited functionality.  What would be something relatively cheap, within a couple hundred bucks, that we could move to next, that would give us RAID 10 functionality in a full hardware based adapter?  And should we make the switch, what kind of performance gains should we see moving from a 4 drive RAID 5 to a 4 drive RAID 10 setup?
Next RAID Card Tier from PERC S300?