I got these following tidbits..
First of all, it's important to understand the chemical nature of brake fluid. DOT 3 brake fluids are mixtures of glycols and glycol ethers. DOT 4 contains borate esters in addition to what is contained in DOT 3. These brake fluids are somewhat similar to automotive anti-freeze (ethylene glycol) and are not, as Dr. Curve implies, a petroleum fluid. DOT 5 is silicone chemistry...
DOT 4 glycol based fluid has a higher boiling point (446F) than DOT 3 (401F), and both fluids will exhibit a reduced boiling point as water content increases. DOT 5 in its pure state offers a higher boiling point (500F) however if water got into the system, and a big globule found its way into a caliper, the water would start to boil at 212F causing a vapor lock condition [possible brake failure -ed.]. By contrast, DOT 3 fluid with 3% water content would still exhibit a boiling point of 300F. Silicone fluids also exhibit a 3 times greater propensity to dissolve air and other gasses which can lead to a "spongy pedal" and reduced braking at high altitudes.
from http://forum.roadfly.com/threads/125...Dot-3-vs-Dot-4

I think dot 4 is a happy medium.