I ride a group ride with a guy who is a Cat 4 racer (he should probably be Cat 3, though) and he whips all our butts on his R700 (I'm talking 20+ MPH avg speed over 50 miles of rolling hills). So, if this bike fits well, then go for it!
That is a good question - with no simple answer, unfortunately.
In my opinion, the first step is to measure some key dimensions of your body and then use some form of fit calculator.
option 1: go to an LBS that seems to have their act together and who offer a "Fit Kit" service - it costs about $80-$100. If you get someone who knows their stuff it is money well spent, but not everyone wants to blow $100 on this sort of thing, so
Then print out the results and use them as a general guide to help you pick a frame size, a stem length and a saddle height. If you ride several bikes that all match your fit calculator results, you can start to get a preference for a particular geometry (standard or compact) and brand (for example, LeMond has a longer wheelbase and you can feel the difference).
It takes a lot of time, but then again you should be able to have the bike for at least 5 years, so 10-20 hours of time doesn't seem too unreasonable.
Yes, bike shorts are a must because they help keep the sweat off you by wicking it away thus keeping you drier. (although in CA thats not as big a problem as in Virginia) Plus the padding... well lets just say its a lifesavor after an hour or so in the saddle
The CADD5 frame is nice - light and stiff. Mine (58 cm) fit perfectly (data from a bike fitting points to exactly the dimensions of the 58cm frame)
I ride it in Cat4 races (crits, hilly 70 mile road races, etc) and believe me, I can't blame the bike for anything!! I have gone through two upgrades (first to Ultegra, now on Dura Ace 7800) and the frame is still doing its job admirably (and as it's a 2002 Saeco team color model it looks cool, which does count for a lot...)