There is some research evidence showing that training to failure is not the best way to build muscle. It's also nice being able to walk out of the gym without wobbling after I'm done
Personally, I think 5 sets per muscle group is *way* too much. My experience (limited to myself and a few friends, unfortunately) is that 1, maybe 2 sets, is more than enough. You're also less likely to use a lighter weight if you know you only have to a total of 10 or 15 reps; no need to save yourself for later sets.
Compound movements are awesome since they get to hit all the little stabilizers that you don't hit on isolation exercises which helps with overall stability.
Machines are, for the most part, crappy, no matter how expensive. I use a machine to hit my calves when I forget to bring lifting straps. For exercises where the machine pivots, it usually forces a joint to move unnaturally. The little stabilizer muscles also don't get hit since the weight it only going to go one way.