Yes reading salah in Arabic is obligatory as the Quran was revealed in Arabic and not in other languages.
And thus We have inspired unto you (O Muhammad SAW) a Qur'ân (in Arabic) 42:7
we read verses from the Qur'an during our prayer, so you need to read the actual verses. For example without reciting surah Fatihah, your prayer is not valid.
And if We had sent this as a Qur'ân in a foreign language other than Arabic, they would have said: "Why are not its Verses explained in detail (in our language)? What! (A Book) not in Arabic and (the Messenger) an Arab?" Say: "It is for those who believe, a guide and a healing. And as for those who disbelieve, there is heaviness (deafness) in their ears, and it (the Qur'ân) is blindness for them. They are those who are called from a place far away (so they neither listen nor understand). (Fussilat 41:44)
The Prophet (Sallalahu alaihi wa salaam) said to:
...Pray as you have seen me praying.. (Sahih Bukhari Book 1 Vol 1, Hadith 604)
He sallahu alaihi wa sallaam prayed in Arabic....
"And obey Allah and His Messenger; and fall into no disputes, lest ye lose heart and your power depart; and be patient and persevering: for Allah is with those who patiently persevere." Qur'an 8/46
We can make supplications in our own languages.
Prayer is both commanded in the Qur'aan and hadiths. How you do the prayer was explained by the Prophet Muhammad sallahu alaihi wa sallaam. People have been praying the same ever since.
A simple prayer guide.
http://www.troid.org/index.php?option=com_content&task=view&id=717&Itemid=442