The main reason I am integrating a xb 360 into my cab is to play, what I call the new gen of arcade games. Things like soul caliber, SSFIV, NBA jam, the new mortal kombat, all the shmups, etc... Arcades are more or less dead, for me it's a way to enjoy new games in a semi-arcade setting.
I see it as a good thing for the mame scene, the more people exposed to the classics, the better
I wouldn't solely put a 360 in an arcade machine. The best thing to do is have both a PC for mame games, and a 360 for new-gen games.
A PC running Mame still has the advantage over the 360:
- You are not limited by game choices. on a 360, you're not going to discover hidden gems that were in the arcade. the 360 only releases what they deem as the "popular" titles. Think about the classic fighters like SFIII:Third Strike, or a great shmup like Progear...heck, you can't emulate other systems like the DC for Under Defeat, or Radigy! You are definitely limited.
- You have a custom front-end. the 360 dash sucks compared to Hyperspin, or Mala setups.
- Repairing a PC is much easier than repairing a dead 360.
- If you really want to take advantage of 360 games, you need a widescreen display. Playing vertical games on a widescreen tv really sucks.
- you don't get the coin-up functions you can normally map in mame to a coin-door. Putting a coin into the machine is the real experience. Hearing that "click-clank-shhh-tunk" sound, in conjunction of the in-game credit sound is just amazing.
- creating a control panel that incorporates multiple control schemes (like dual stick shooters for Robotron, or rotary joys, or spinner games) is pretty much fubar'd for a solo 360 setup.
- New gen games that require use of the 360's analog sticks are pretty much out of the question. I.e. Geometry Wars, Mutant Storm. Best to run those games off the PC. There is currently no good solution for hacking up the analog sticks to be used with a joystick.
IMO, having a 360 as the main driving hardware for a cabinet will only be good when the 360 gets hacked and can run Mame and whatever FE. and of course, figuring out a way for the analog games (dials, trackballs, etc...)
For now, the only reasons to have a 360 in a cabinet is for SSF4, Pacman CE/CE:DX, and maybe a few other retro-remakes. Galaga Legions can't even be played properly without the analog sticks!
New gen console + PC for mame is the best way to go.