The main questions you want to ask yourself is:
What types of games do I want to play? This is the most important question. You'll notice lots of guys building different types of machines with different controls and monitor orientations. If you check my signature, you'll see some of my machines. You might be asking yourself "but if I am using MAME, can't I build 1 machine to play everything?" the answer is yes, if you are willing to make sacrifices. The answer to "what types of games do I want to play" for me was 3 different types of games. Machines looking mostly original was also important.
I have a Donkey Kong cabinet. It's monitor is setup vertically (on it's side) and it has a 4 way physical restricted joystick with 1 button. This accurately plays about 30 games. This cabinet is my favorite as it plays all the classic 80's games I love. It looks exactly like a Donkey Kong machine with a 19" arcade monitor. The joystick is important to consider, but I really don't know any way to tell you which joystick is the right one for you. What I did was took my favorite joystick and use it for all my 4 way games. This plays Ms. Pacman, Frogger, Galaga, Dig Dug, etc.
I have a mortal kombat II cabinet that has two 8 way joysticks and a 25" arcade monitor setup in a horizontal fashion. It plays hundreds of games, but the main ones are Street Fighter, Mortal Kombat, Ghosts'n'Goblins, etc.
The 3rd cabinet is a spinner cabinet that plays tempest and a few others.
You'll notice some people put all these controls on 1 cabinet. Called a frankenpanel. There is nothing wrong with doing that, but you'll need to decide how you want to build. If you put all your controls on 1 cabinet, some people think that it's not as nice looking or functional. If you want multiple machines, it takes up more space, costs more, and requires more maintenance.
How much do you want to spendPlan carefully, put together a budget, and plan on exceeding it. It's usually cheaper to convert than build. Also consider the cost of any tools you may need.
Build or convert?You can build a machine from scratch, or you can take an old machine and convert it. Converting is a great way to get started. Find an old arcade game for free or cheap. Put in a monitor, controls, and configure MAME. You'll have a working machine very quickly, but more importantly, you will have gained the skills to decide if you want to build another one and will most likely learned a few lessons.
What controls to use?Everyone here has walked this path. You will too. If you know you only want to play a few different games, find out what controls they originally used and that will most likely be the feel/look you're looking for. Try out plenty any controls before committing them to a control panel. I used to have no preference on controls, and now because I've built my own arcades, I'm very specific.
Get Saints bookThe guy who runs this forum:
http://www.amazon.com/Project-Arcade-Build-Your-Machine/dp/047089153X/ref=sr_1_1?s=books&ie=UTF8&qid=1327237502&sr=1-1Good luck