This isn't a black and white question. The choice depends on alot of factors.
What sort of cabinet are you building? A normal sized cocktail cab will look fine with a 21" in it. A larger 4-player cab is gonna dwarf a 21" monitor and look sorta foolish, either having HUGE bezel space around the monitor or having the CP extend WAY past the edges of the cabinet. Either option is aesthetically unappealing.
What are your favorite games? If you're a huge fan of vector games, even a component video input TV isn't really gonna do them justice. OTOH, raster games look a little more authentic (in most people's opinions) on a quality TV. A monitor (even tweaked with scanlines and such) is just
too sharp.
Along those lines, are your favorite games horizontal or vertical? A 21" monitor will display one type of game or the other at a slightly smaller-than-original size, depending on how you mount it. A 25" TV will be able to display both orientations at essentially their original size.
Personally, I'd just build a coupla cabinets to house each.

Dedicate the monitor one to vector games, and the TV to everything else. Though, since at least one of the absolute classic vector games is vertical, while the rest are horizontal you may need to build 2 vector cabs. It never ends!

OK, ok. For general all-around use, I'd choose a high quality 25" TV. Looks better in the cab and gives more size for the $$$.
D