There's an interesting discussion at SitePoint whether you should use PHP4 or PHP5 at this time. Most people say PHP5, and I somewhat agree with them, but there's a few things to keep in mind.
If your project is going to be a personal or internal one, where you are sure PHP5 is installed, then there is no problem, and you should definitely go with PHP5.
But if you're writing a commercial script, then I'd re-consider, and would personally go for PHP4. Why? Well simple, most web hosts are still running PHP4. If you go with PHP5, then you are excluding a large part of the PHP market, and that will probably harm your sales.
Not until PHP5 is used by 90% of web hosts, will I actually make the definite switch. By keeping everything PHP4 I get both of best worlds. It works perfectly fine with PHP4, and it works with PHP5 as well (there are a few things you must watch out for).