A few points:
You can't just run a RAID 1, that's used for backup only.
You could change to a RAID 0 + 1 if you had four identical hard disks and enough SATA connectors on your motherboard/controller to accomodate them.
If you run a RAID 0 again, you'll lose 40Gb of space on your new hard drive. RAID 0 is best run on two identically sized HDD's, preferably both of the same make and type.
If you set up a 120Gb and an 80Gb disk as a RAID 0 array, the controller will only see the 120Gb drive as 80Gb, as it will default it to the smallest sized disk in the array.
As you now have two different sized disks, I'd strongly recommend not bothering with a RAID setup and reinstall your current setup to one of your disks and use the other one as storage.
Personally, I'd use the 120Gb disk for main operating system and 80Gb as storage. You could then (using True Image) keep a constant compressed backup of main disk on the storage disk.
But how you arrange the disks, is, of course, your choice.