Greg - good post, but the explanation of IOPs is not correct. You write:
In basic terms IOPS is a measurement for the amount of time, on average, required to service an input or ouput request (a read or a write).
That's the definition of total storage latency, not IOPs. (I mention total storage latency because your post also mentions rotational latency.)
I like to explain it using FedEx. Let's pretend you're sitting at work, and you want to find out how fast FedEx delivers packages. You seal up one envelope, write New York City on the label, and call for a FedEx pickup. The driver arrives, and the next morning, you get confirmation that your envelope arrived in New York City.
That's one operation per day, one package delivered - however, that doesn't mean FedEx can only deliver one package per day. To really test FedEx, you have to put together LOTS of packages and envelopes, then call for the truck. One package still takes the same amount of time to be delivered, but they can handle many at once.
IOPs = the number of packages you can move.
Latency = how long it takes to move each package.
The size/speed/quantity of the truck also come into play to make the total storage picture, plus the size/speed/quantity of the truck on the other end, and the office's size on the other end - I talk through that in my day-long storage classes.
I'd also disagree strongly about your recommendation for RAID 5 for backups. I see a lot of shops that use a shared RAID 5 array for backups from multiple servers, and the backup times are unacceptable to the business. Simply by switching that target to RAID 10, I've seen backups drop from >4 hours to <30 minutes, for example, without raising the spindle count. Granted, capacity drops, so you can keep less backups online and they have to go to tape quicker, but if your goal is backup performance, RAID 5 won't cut it.