It has to do with the way the LCD crystal are activated and aligned.
A quick rundown of the different, most common panel type:
IPS: Advantage - Best color reproduction, best viewing angles horizontal and vertical, we are talking 178 degrees here. Disadvantage - A little slower than TN, expensive, hard to find.
PVA: Advantage - Best contrast of the types. This one has the blackest blacks. Great viewing angles, though not as good as IPS ( we are still talking in the 170 degrees + here, horizontal and veritcal) , 24 bit color, but not quite as good as IPS due to slight color shift off center. Disadvantage - Response time is the slowest, slight color shift off center compared to IPS, but better than TN
TN: Advantage - Fastest reponse time, cheapest, easiest to find. Disadvantage- Does not display true 24 bit color, can only produce 18 bit color and uses dithering to compensate, which leads to a more pixelated look; Worst contrast ratio of the types; worst viewing angles. The way TN displays are designed, the crystals are perpendicular to the display, so the viewing angles are the worst, while most would find them acceptable horizontally, vertically they are really bad.
Here is my opinion:
IPS - in my opinion is overkill. They are hard to find, and expensive. The advantage they give - superior color reproduction and viewing angles is, in my opinion, lost in an arcade cab where you are mostly going to be standing right in front of it, so viewing angles aren't that important, and the images aren't going to be 24 bit anyway.
PVA - I think this is the best option. They are pretty easy to find and reasonably priced. The advantage they give - contrast ratio, is in my opinion the best of the advantages. The disadvantage - response time, is something that doesn't matter that much. In short response time is sort of a ---That which is odiferous and causeth plants to grow--- comparison tool due to the fact that there is no universally standard way to measure it, and people confuse that with input lag, which is different than response time. Anyhow, get one that is under 20ms and you will be fine.
TN - Really isn't a bad way to go, unless you want to vertically mount the monitor, or use it in a cocktail. The disadvantages - color reproduction and viewing angle, don't really matter IMHO when it comes to a cab. Most of the games in your cab will not have 24 bit color, and you will be playing the cab standing right in front of it, so viewing angles don't matter. These are cheap easy to find. I think most people would be happy with a TN monitor
I use a PVA panel, I love it. The viewing angles are fantastic, I don't notice the color shift at all when viewing from an angle, I love the contrast on it, the blacks are really, really black. I don't notice any lag at all, the picture is just great looking. I would recommend a PVA to most people.