Server Redundancy

I have been asked to prepare a proposal to start a small Application Hosting Network. It will consist of Win2000 Terminal Servers and a SQL 7.0 server at the backend. The question I propose to you fine readers is: How far do you go with redundant server features in order to offer 24×7 uptime?
Is RAID neccessary? Dual Fans, Dual Power supplies? Is it mandatory to go as far as Server Clustering?

I am looking for opinions that come from experience, and also pointers to sources of information.