Here's the reason behind the madness:

Most arcade machines that get mamed have wires for power that are rated just good enough for what is in it. A monitor is rated at only 85W and a jamma board not that much more.
So the power lines inside are about 20-22 gauge. But when you bring a PC to the picture (That might have a 350W power supply) those wires are not good enough.
You can always pull all the wire out, put new higher rated on/off switches, etc.. but that's too much work and $$$.
The easier thing to do is what I did (and others do). Have the monitor control everything. This way, when I turn on the monitor, it activates a relay in my special power supply that gives power to the rest of the outlets, and everything turns on. It's the actual power outlet that has a nice thick cable and plugs into the AC outlet!
Now, in regards to software:
- I have my motherboard set to turn on after AC power restore. So when it gets power, it automatically turns on, and WindowsXP boots!
- When I'm done playing games, I uses MAMEAWH to exit and shutdown.
- When the PC is fully shutdown, I flip the switch and everything else dies.
Now, you might think that because the PC was cleanly shutdown, when the AC is restored it won't power on.. but that's not true! Even after a clean shutdown, if the power is taken away (While the PC is off) and is returned, the PC automatically starts up!
Hope this helps...