Issue with RAID-Degraded

I have a Mac Pro which has 3 internal 1TB Hard Drives. The first drive is the main system drive and the 2nd and 3rd are both used as a 'server drive' which I share and use with all the laptops in my office.
This 2nd and 3rd server drive are set up as a RAID slice.
Everything has gone well except for until around 3-4 weeks ago whenever I would restart the Mac pro it made a strange sound. I don't know how to describe it but at first I thought it was one of the fans on the graphics cards or the fan on the power supply but I ruled that out. It seems that it's coming from one of the hard drives. It only makes the sound at bootup and then it's fine.
I looked at Disc Utility and saw the following:
The 1TB drive that's used as the RAID is listed at the top which it saying just below: RAID Slice for 'Server Drive'

Then it lists my Macintosh HD and below that it lists:
999.86 GB Server Drive
and below that says Server Drive

When I click on 999.86 GB Server Drive it says for RAID Status: Degraded

The type of RAID I'm using is the Mirrored RAID Set

If I click on the RAID tab while selecting the RAID drive I get the following:

999.86 GB 'Server Drive' Mirrored RAID Set: Degraded
999.86 GB Raid Slice (disk0s2)
RAID Slice (and some long number): Missing


I don't know what's going on here. Because of the noise I'm assuming one of the drives is either in the processing of failing or has already failed. From looking at the above information I get the same feeling.

I have a program called Data Rescue 3 which I have run on all 3 drives and it's showing them as healthy.

Does anyone know what the above means? Is there a hardware problem with my drive or is there an issue with a setting on the RAID that can be corrected through OS X?

Thank you for your help.

First off,...do you have a viable backup?

Next, Take a look at this,...

Rebuilding a degraded software mirrored RAID array | MacFixIt - CNET Reviews

Fortunately I do have a viable backup.
I have put in for an RMA exchange of the bad drive and will be replacing it shortly so the information provided will help a lot.
Also, because of this situation I've decided to buy another hard drive so I can also use RAID to mirror the drive in slot 1 so I will then have two sets of mirrored drives.
Currently all 3 drives in my system are Seagate Barracude ST31000340NS 1TB 7200 RPM 32MB Cache SATA 3.0 GB/s. I can get another of these for around $149.
I have found a sale on a Western Digital drive. It is the WD1002FAEX 1TB 7200 RPM 64MB Cache SATA 6.0GB/s. If I'm correct the Mac Pro won't work with 6.0GB/s so it'll run at 3.0GB/s.
Now when I set up a RAID configuation do both hard drives have to be the same size? I know this won't be an issue here since both are 1TB but how closely do they have to match? I know in this case my current hard drive is 32MB Cache and this new one is 64MB cache. Will this cause any issues?
Also, since this newer drive is faster is there a way I can make this a primary drive in my RAID or something like that so that it can speed up my system?
Thank you again for your help with these questions.

The software RAID will dumb down to the lowest common denominator. I've used a 30 and 40GB disk set to make a 30GB RAID1. In a perfect world the drives would be the same, but not necessary.

There isn't really a primary drive in a RAID. Software RAID1 is certainly a nice feature to have in OS X but the speed will always be slower on software RAID1 versus single drive or RAID0.