It’s definitely handy to have internet connectivity on the cabinet. For example, I play in the high score club over at AtariAge, where a new game is played every week, and pictures of scores need to be posted. It’d be nice to just grab a screen shot and send it right from the cabinet, but ultimately I’ve found that internet connectivity on the machine is just more of a headache than it’s worth.
Somebody asked “why would you use an XP machine?” and my answer to that is “why wouldn’t I?” if it plays everything I want to play at full speed.
As a nice middle ground, I have a second wireless network in my house that is just a router not connected to the internet. I can use that to transfer files to and from my cabinet, while still keeping it isolated from the internet.
Still, since my main PC is just a few paces across my basement from my cabinet, I think the best solution would be to just use a USB stick to transfer stuff back and forth, but unfortunately I didn’t bother to include an easily accessible USB port on my cabinet.