I third the notion that the # of teeth on the encoder wheel definately counts. To suggest otherwise is either ignorance talking, or plain old bull.... and anybody that understands the Arkanoid problem isn't ignorant.
In my experience, the number of teeth on the wheel definately makes a difference in MAME. Any game that requires the sensetivity to be set higher than 100 is suffering from it. The more teeth you have on your encoder wheel, the less likely you are to have to set your sensetivity over 100.
I've played around with lots of different encoder wheels, with different tooth counts. Just for reference, here are the ones I actually saved the numbers for:
DOT spinner (original) has 128 teeth.
The Oscar DOT has 72, same as Blasteroids, Tempest, Oscar Vortex, and the 720 joystick.
The Pole Position wheel has 24 teeth, with the gearing you get just shy of 4 revolutions of the encoder per turn of the wheel, for somewhere around 80 teeth actually passing through the optics per one turn of the steering wheel.
Arkanoid is the special one. The knob attaches to shaft #1, which has a 72 tooth gear on it. That gear turns a 16 tooth gear on shaft #2. Shaft #2 also has a 72 tooth gear on it, which then turns a 16 tooth gear on shaft #3. Shaft #3 also has the encoder wheel on it, which has 24 teeth.
So, shaft 2 spins 4.5 times for every turn of shaft 1. Shaft 3 spins 4.5 turns for every turn of shaft 2. 4.5 squared is 20.25 turns of the encoder for every turn of the knob, which is 486 teeth per revolution of the spinner knob!! (That's even more than was stated above, but I believe my numbers are correct, unless anybody sees any math errors.)
SlikStik still has better knobs, though.