If the cabinet is going to be a "dedicated" cabinet, the arcade monitor offers the most authentic picture.
As mentioned above, they can be somewhat difficult to configure though.
If it will not be dedicated, I would (and did) go with a good sized PC monitor.
I got a 21" for about $200, and have never looked back.
The nice thing about the PC monitor option is that it will let you display 1600x1200 resolution for other programs (PC games, graphics programs, etc...), but can still be "uglied down" to display a relatively authentic picture for arcade stuff.
I tried the TV option, and found it the least preferable because the picture tends to be fuzzy on them, the coloration is spotty (especially in the menus), and the sizing is problematic on some games.