Raphael is a vector graphics library, done using SVG, whereas HTML5 canvas is bitmap graphics.
If you want to do vector graphics, I think going with Raphael is probably a good choice over "just" canvas. As you say, canvas does not quite work with IE and it will probably be a while before it's natively supported. If Raphael does what you need, there is no particular reason not to use it.
Do note that there are also other libraries for this: Excanvas, which emulates canvas for IE using VML (as far as I know), and also some others which do the same with Silverlight and Flash but I forgot their names.
There's also Dojo, which has a component for abstracting canvas usage behind an easy to use interface, which also supports IE.
Having native canvas in all browsers will not make the libraries obsolete, since the libraries usually abstract some of the canvas complexities away, making the usage easier.