The "ideal" password hashing function, right now, is bcrypt. It includes salt processing and a configurable number of iterations. There is a free opensource PHP implementation.
Second best would be PBKDF2, which relies on an underlying hash function and is somewhat similar to what you suggest. There are technical reasons why bcrypt is "better" than PBKDF2.
As for your specific questions:
1. would it be beneficial to include username in salt?
Not really.
2. I have decided to use a common salt for all users, any downside in this?
Yes: it removes the benefits of having a salt. The salt sole reason to exist is to be unique for each hashed password. This prevents an attacker from attacking two hashed passwords with less effort than twice that of attacking one hashed password. Salts must be unique. Even having a per-user salt is bad: the salt must also be changed when a user changes his password. The kind of optimization that an attacker may apply when a salt is reused / shared includes (but is not limited to) tables of precomputed hashes, such as rainbow tables.
3. what is the recommended minimum salt length, if any?
A salt must be unique. Uniqueness is a hard property to maintain. But by using long enough random salts (generated with a good random number generator, preferably a cryptographically strong one), you get uniqueness with a high enough probability. 128-bit salts are long enough.
4. should I use md5, sha or something else?
MD5 is bad for public relations. It has known weaknesses, which may or may not apply to a given usage, and it is very hard to "prove" with any kind of reliability that these weaknesses do not apply to a specific situation. SHA-1 is better, but not "good", because it also has weaknesses, albeit much less serious ones than MD5's. SHA-256 is a reasonable choice. As was pointed out above, for password hashing, you want a function which does not scale well on parallel architectures such as GPU, and SHA-256 scales well, which is why the Blowfish-derivative used in bcrypt is preferable.
5. is there anything wrong with the above algorithm / any suggestions?
It is homemade. That's bad. The trouble is that there is no known test for security of a cryptographic algorithm. The best we can hope for is to let a few hundreds professional cryptographer try to break an algorithm for a few years -- if they cannot, then we can say that although the algorithm is not really "proven" to be secure, at least weaknesses must not be obvious. Bcrypt has been around, widely deployed, and analyzed for 12 years. You cannot beat that by yourself, even with the help of StackOverflow.
As a professional cryptographer myself, I would raise a suspicious eyebrow at the use of simple concatenation in MD5 or even SHA-256: these are Merkle–Damgård hash functions, which is fine for collision resistance but does not provide a random oracle (there is the so-called "length extension attack"). In PBKDF2, the hash function is not used directly, but through HMAC.