Being live just has a better atmosphere because as Bischoff said on the Monday Night Wars DVD, there's that spontaneous feeling that anything could happen at any moment. I'm sure they use the 5 second delay when it comes to language (though I can't recall the last time someone was censored as far as words go, unless you count PPV) but there's certain things they couldn't censor out. Catching someone's language is one thing, but as mentioned, if you have a fan incident or something like a unique crowd reaction that can't be contained, that helps give Raw a really special atmospheric feeling.
However, I'm pretty sure ratings aren't really any better because of the show being live. If I recall, Raw was still primarily a taped show (despite a live show here and there) all the way up until some period in 1999 where they decided to go live full time, but yet, the ratings had already long turned around by then and they were beginning to not only beat but destroy Nitro, despite Nitro being a live show. Raw has been live ever since, even though the ratings have continued to decline. Smackdown's peak in ratings was also when it was a regularly taped show, even though it started out live. (Not arguing that being taped is better, just that it doesn't guarantee a bump in ratings, but despite this, I still wish Smackdown was live and on Tuesdays.)
