A new server has been configured where I work and the OS, SQL Server
Data and Logs have all been put on a Raid 5 array. I challenged this,
and got told this "is the best way of doing it in regard to
performance" by a senior DBA. This server will contain over 40 fairly
large databases, and is a pretty powerful server spec wise with 12GB
RAM, 4 Cpus.

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RAID 1 and the SQL data files on Raid 5. Is that correct?

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correct, but I've been been attempting to find something "official" on
Microsoft that I use to back my opipion up but I can't seem to find
anything. Does anyone know of anything I can use? Or am I wrong with
what I've said?

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How about citing Books On Line to support your case?
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Database Design | RAID

"If data must be quickly recoverable, consider mirroring the
transaction log and placing the database on a RAID 5 disk. RAID 5
provides redundancy of all data on the array, allowing a single disk
to fail and be replaced in most cases without system downtime. RAID 5
offers lower performance than RAID 0 or RAID 1 but higher reliability
and faster recovery."

There is a nice diagram/explanation of RAID 5 at
http://www.pcguide.com/ref/hdd/perf/raid/levels/singleLevel5-c.html.

And RAID 1, a.k.a. mirroring, at:
http://www.pcguide.com/ref/hdd/perf/raid/levels/singleLevel1-c.html.

(These take a while to load.)

The "Recommended Uses" sections bolster your case.

Now for the politics: how do you go back to the senior DBA?

The extract from BOL, if read quickly, could be construed as
supporting him.
Maybe rewriting that as:

If data must be quickly recoverable, consider:
- mirroring, i.e. using RAID 1, for the transaction log
and
- placing the database on a RAID 5 disk.

Roy