If you are using the mosfet in a switching mode, on or off only, then you need a gate voltage that fully saturates the device on, 10vdc for your device. That of course can not be provided by directly from an Arduino output pin. You can however wire up a normal npn transistor as a switching device ...
Like the OP, I too am a bit confused about MOSFETs. I purchased and assembled the "Power Driver Shield Kit" from Sparkfun, details here:http://www.sparkfun.com/products/10305
This uses 6 RFP30N06LE MOSFETs where the 6 gates are directly connected to the Arduino digital pins 3, 5, 6, 9, 10, 11, giving six independent "switched" outputs. It also has a socket for plugging in an ordinary ATX (PC) power supply, with the intention obviously being that you use an old PC's power supply as your main power source, and the Arduino for switching it by turning on and off the digital lines.
However, the (source?) voltage to the MOSFETs is 12v from the power supply. So this appears to not follow your statement that the MOSFET will not fully saturate (5v to switch 12v) and therefore we might expect to see smoke, etc.
Or does this particular MOSFET fully saturate at 5v? How do I work that out from datasheet? I admit my eyes glaze over looking at all that detail. Which is the relevant parameter?
I assumed that Sparkfun wouldn't release a product with a major design flaw, so is there something here I am missing? Will this shield work properly, or is there more to this than meets the eye?