Hi and no insults here... (this board is USUALLY completely insult free... Howard can squash a newbee like a bug somedays though

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between wood or buy laminated... Find out what you can get cheaper. I initially went laminated for the control panels only because I got some cheap stuff. But I replaced it with wood and vynal *(sp?) later. The wood/vynal was easier, but the end results where very similar. The laminate doesn't cut as nice on the edges, but you couldn't see it because of the buttons hide it a little. But my vote wood. Wood also has the advantage of being able to test the control panel and see if you like it before you vynal it... So that you can test layouts before you spend any real cash on it.
Wood - MDF is right... but thats one type.. Most people use 3/4 inch. I don't think there is anything elst then that you need to know. Go to a lumber yard and you will see it. Also, you will want some 1x1's for construction at the joints. Easy to do, strong connections, no screws on the outside. There are some threads on this elsewhere, but basically you glue and screw the 1x1s to the side boards (screws on the insides with 1 1/2 inch screws so they don't go all the way through. The 1/2 inch and the glue should be enought to hold).... Then screw in (from the inside on the front... back doesn't matter as much) the front panel. If you don't glue the front/back, you can break it down... but you loose some strength. Up to you really here. I would go with extra screws myself.
If you are building a whole cabinet. Use wood on everything and paint with rollers. Spraycans really doesn't do it. Also consider that you will want a few coats. Paint before you put all the stuff in helps. And also paint the inside of the cab enought so when mounting everything, you have some slack (so you don't end up with some wood color sticking throught at parts.
As for joysticks. I like the bat style happs super. But thats what I'm used to.. But get one like what you where brought up with... That will be the best for you. Joystick preference changes. Some say ultimates are the best... and I really don't like them... Oscar has a great review of all the happs ones. I personally think Wico for ball tops myself. I have some 4 way ball tops and like them. I don't know if their 8ways are any good.
One thing to look at is where you can buy from in your country.. That will make a HUGE difference. It will be worth getting happy with whats available then spending a ton for shipping!
Have you decided on what monitor type your going for? (I would go true arcade monitor with ArcadeVGA as best, then TV out with SVid (or the european standard... I don't know what the quality is for your area... stay away from composite).. Then Industrial VGA (large low resolution monitors)... Then SVGA monitor...
Have you considered buying an old arcade and converting it? (this I wouldn't recommend unless you can get it super cheap because it's basically dead)..
Have you also considered if you need/want a trackball? Other specialized controllers? You might start thinking about doing hot swappable control panels. This is nice... but 90% of the time I have my 2player 7buttons each control panel... but it's nice to plug in my asteroids one or some of the others when the games is right.....
Have you decided on a keyboard encoder yet? I would highly recommend getting one... But if thats not an option, I would look at hacking a joystick first (they usually don't have ghosting problems since they are usually desigined to have all the buttons pressed at once)... Then a keyboard (works for some, but expect a lot of playing with matrix's and such... Lots of time getting a 2 player control setup)
And last...
I'm sorry for bringing up more questions then answers...
I love this hobby!