I'm modifying my cabinet to do this.
I've tooken an old KVM switch, and converted it to my arcade controls switch IPac/PSX controllers.
If you decide to get your cabinet to do both, make sure that the PSX controllers and PC interface(ipac, gamepad whatever) are not connected at the same time. In other words if your playing on your pc, make sure that the controls circuit do not connect to your playstation and vice versa.
Like I said I using an old kvm switch to accomplish this, but it could be as simple as a usb adapter for ps2 controllers or a molex or dsub (db15 are good for a single set of controls) connector for each game pad.
Others have implemented switches using IC chips (micro chip with control logic in it). I wanted to try this but the cost ended up more expensive than modifying my existing unused kvm switch....
here's a link to somone who implemented a switch built out of integrated circuits (ic)
http://www.russprince.com/cabinet/controlcircuit.html