I just stumbles across this thread (haven't been around here for a while). Anyway, I won't touch the plywood vs. funiture grade vs. MDF, but i will tell you this.
My first cabinet was made with "chunky" particle board. You know, the kind that looks like a bunch od large "chunks" were glued and press together... Anyway, I covered it, don't laugh, with an adhesive and then black vinal. It was cheap, and so was I.
It was build very solid, but the adhesive started to give way over time, and I got bubbles in the vinyl.
So, fast forward about 6 years to my 2nd cabinet. I've learned how to use real power tools, and understand that one good (and correct) tool is better than 2 cheap, or "not quite right for the job, but I'll make it work" tools.
I've also learned that if I am going to make something that will last, I mean that I want it to last, so for #2, I used a higher quality "fine" particle board base. The kind that you see in the cross section of your kitchen counter top, and I sure as heck laminated it with a nice quality laminate. Now THAT stuff is durable. Looks better than anything I have personally (note the word personally, there may be something better) seen in a cabinet. It cleans up well, you can put artwork on it without having to worry about the surface ever coming off, etc. I mean, really, it IS a counter top in essence, so it should be strong.
Now, I've seen some nice paint jobs on cabinets, with many, many, MANY coats and a lot of sanding. It CAN be done and hide every bit of wood grain. To me, my time is worth more than that. I mean really, a cabinet takes long enough to build. Granted, I had to get a sheet of 12' long laminate, which wasn't cheap, but I don't plan on ever building another cabinet again, and I saved my self probably 2 weeks of evenings by not painting and sanding all 14+ coats that the one guy did years ago (wish I had a link).
Good luck, my friend. It is a fun process. Oh, and keep in mind something that I have heard horror stories about more than the type of wood. If you are doing a custom designed cabinet, make sure that it fits through the doorway of where it is going, or if you are building it where it is going to be (I build mine in my partially finished basement, and then moved it out when it was time to carpet. Mine fit just fine, but what a surprise that would have been if it didn't), make sure that you can get it out. Either way, the sucker is going to weigh a LOT.