> I would like to serve primarily iSCSI from this to a
> VMware cluster, and maybe some NFS, although that is
> not as important.

Actually NFS would be a much more elegant and simple solution, if your clients 
are NFS capable, even for example for database workloads (did you know that 
Oracle has a built-in NFS client/accelerator of her own?)

> I think the best approach would be:
> 
> Use both PERC/5E controllers.

Good approach. Try to configure MPxIO, so you have load balancing and 
multipathing over both controllers.  See http://docs.sun.com/ for details on 
how to configure MPxIO.
  
> Setup both MD1000 as JBOD and not use any of the
> horrible RAID capabilities

Yes, this will give you the best ZFS performance.

> Connect all four ports from the PERC/5E's
> individually to the MD1000's
> Use software RAID (is this raidz?) in Opensolaris and
> create some RAID sets

RAID-Z. Actually, in your case, it should be RAID-Z2. As to why, read below...

> The question then becomes - how many RAID sets -
> should I not span the individual ports from the PERCs
> to the MD1000's - I believe that port 0 on the MD1000
> addresses drives 1-7, and port 1 addresses 8-15.

Good question, and the following might help you:

"When to (and not to) use RAID-Z"
http://blogs.sun.com/roch/entry/when_to_and_not_to

> Anything else that I should be aware of?

Yes; As I've written above, you probably should implement RAID-Z2, which is a 
variation of RAID-Z, but with double parity. You will of course lose one 
additional drive, but at 400GB a piece, can you really risk being without 
protection for that long?

400GB takes a while to sync. Ideally, if you can afford it, you should 
configure RAID-Z2 with a hot spare, so that you can lose a total of three 
drives before being out of service.
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