Monitor

Deciding on a type of monitor is the single most difficult decision in building a custom cabinet. This is a hotly debated topic on many cabinet building websites so let me explain. No, there is too much, let me sum up:

Display Type	Pros	Cons
PC Monitor	Crisp display provides lots of detail Easiest way to connect to a PC, no special video hardware required	Crisp display makes older, lower resolution games look very blocky Usually very expensive
Television	Very inexpensive. TV screen provides a smoother display making games look more authentic than with a PC Monitor	Requires special hardware (video card with TV out) The smoothing of a television screen may be a little too blurry, losing detail.
Arcade (RGB) Monitor	Medium expense (more than a TV, less than PC monitor) Most authentic looking display	Requires special hardware (totally custom) Has trouble dealing with higher refresh rates, so running Windows is out

To see the differences, take a look at Oscar Controls Monitor Comparison, or a similar study at BYOAC. I happen to be in a position of having used all three possibilities, which puts me in a unique position to judge the results. My first machine used a 21" NEC PC Monitor. The second machine used a 27" Sharp television with an S-Video interface. Supercade uses a 27" Wells-Gardner Arcade Monitor (D9200) with a built-in VGA interface. My Dragon's Lair cabinet uses a 19" Wells Gardner (U3100).

PC Monitor

If possible, use the Windows port of MAME. Run the games at 640x480, and use hardware stretching (-hwstretch) with the default render effect (-effect none) and a good video card. Most modern video cards use interpolation when they perform hardware stretching, and the effect is smoother and more authentic than what is provided by other effects and ports. The interpolation mostly eliminates the "blocky" appearance that normally makes PC monitors a bad choice. Also, recent versions of WinMame include some interesting D3D effects, so try them out as well. If you have to use DOS, you can try using AdvanceMAME and play around with the video settings to get a good effect.

Television

There are a few things which significantly improve the appearance of the games when used with a television:

Use an ATI video card. I've played around with many video cards with TV out, and ATI seems to be the only one that really gets it right. The ATI cards use more of the screen room, and they give you a sharper picture.
Use S-Video (for the connection between the video card and the television). I can't even begin to tell you how much difference this makes over composite. Unfortunately, they don't usually make S-Video on smaller TVs. 27" is usually the smallest you can find.
Use a high-quality television. This is a weird one, but I had a lot of trouble using Sharp televisions because if I had them turned at certain angles, there would be a strange color distortion in one corner of the screen. This probably isn't the TVs fault exactly. I'm using it in a way it was never intended (tilted at a 50 degree angle, and displaying a lot of static colors, rather than moving images). This is the biggest disadvantage of using a television.
If you're using the Windows port of MAME, use the sharp effect (-effect sharp). The increased sharpness looks much better, since the television screen provides its own smoothing. Other ports are usually pretty sharp to begin with. You probably won't want to use scanlines.

Arcade Monitor

There aren't really any special instructions here. Not surprisingly, an arcade monitor is the most authentic looking. Ideally, you want to avoid the interpolation mentioned in the TV section. However, the -effect sharp switch is only effective at resolutions greater than 640x480 -- and many arcade monitors won't go higher than this. The good news is that even with the interpolation, it still looks pretty amazing. I'm hoping to try out the ArcadeVGA card in the near future, which I understand can produce even more authentic results.

Comparisons and Conclusions

The short answer is no matter what you use these days, it can look pretty good. Hardware stretching and D3D effects make a PC Monitor look much more authentic than it used to.

Traditionally, the biggest problem with an arcade monitor is interfacing it to a modern video card and dealing with the refresh rate issues. But there are arcade monitors available with VGA interfaces that run at 640x480 -- which resolves a lot of issues, and the ArcadeVGA card also solves this problem.

If you choose to use a TV, you can still get extremely good results. In fact, looking at the same images side by side on my TV and my arcade monitor, they look very similar. There's a little more blending on the arcade monitor, so the image looks smoother. Also, the colors are much more vibrant on the arcade monitor. But the TV comes pretty darn close.