Hot spare or extra parity drive in RAID array?

The only good reason for having a hot spare in my opinion is if you have several RAID-5/6 arrays and want to share the spare between them. Otherwise, it is a waste.

Many will justify use of RAID-5 + spare vs RAID-6 by performance reasons, but this performance difference is THEORETICAL. From my experience the REAL performance difference between RAID-6 and RAID-5 is negligible or non-existent. I'm talking about hardware RAID with decent controller with at least 8 drives, and system with enough memory to provide good caching. In this configuration write speed is likely be limited by SATA/SAS/SCSI bus bandwidth. So, if performance is not an argument then everything else speaks in favor of RAID-6.

Normally, I would suggest avoiding RAID 5 in favor of RAID 10... But to answer your question, this can be a function of your application's needs and requirements, as well as the capacity of the drives.

An example of using a spare instead of dual-parity is when performance is a priority and there is little concern about rebuild time (as with high-capacity disks) or a second failure during RAID 5 rebuild.

When performance matters more then the possibility that you may lose two drives quickly. Adding a second parity, means that RAID controller, is going to have to compute that second parity. Although if I was really concerned about performance I probably wouldn't be looking at RAID5 at all.

Also, don't forget, if you are extremely paranoid you could do both RAID6 and hot spare.

Also keep in mind that RAID5 is more common, some controllers don't even support RAID6.