Here is my take on all of this......
Arcade monitor
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+ Authentic arcade quality
- Pain in the ass to set up no matter how technically gifted you are. This is one of those things that you'll have to tinker with to get it just right. Expect to be up a while trying to find the resolution that will fit your screen perfectly.
- Expect nothing more than to use it for arcade games
- Tend to be a bit pricey for anything above 19"
PC Monitor
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+ Easy to configure. Plug and Play, baby!
+ Versatile for many applications
+ Unsurpassed picture quality
- Sometimes, the picture quality is so good that it makes many arcade games appear "grainy" and you see a lot of jagged edges.
- Can't go above 21" without paying a lot of $$$$
Television
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+ Good picture quality using S-video or component TVs
+ Big screen action
+ Extremely versatile. Surf the net, watch TV, and play arcade games in your cabinet
- Not quite the quality of an arcade monitor
- Some setup involved
You make the call. People have different preferences when it comes to this so you just have to decide what you want.
If you want my personal opinion, I would go with a television using s-video. I am currently using a Sanyo 27" television with s-video and picture-in-picture, and I love it. It has 600 lines of video resolution, and I cannot tell you how happy I am with this model. I went with some high quality, gold-plated s-video cables(don't skimp here!) and have that running through a TView Gold scan converter. The scan converter automatically centers the picture and stretches it to the TV screen. You could use the regular TV-Out on your card, but then you'll need a seperate program (ex. TV Tool) to optimize it to the screen, and even those don't do a great job. The TView Gold scan converter is the best scan converter I've seen in a while. If you get a chance, pick one up. They will save you a lot of hassle and will extract the best picture from the video card to your TV that it can. So here is my setup:
27" Sanyo PIP TV
TView Gold scan converter
ATI Radeon 8500 64mb
RCA Digital High Definition S-video cable
If you want a true arcade experience, then you need to steer clear of PC monitors. Trust me, a good TV or arcade monitor will give you that authentic arcade feel.