Hi Wussie,
"Real" sticks and buttons are cheap and a cheap way to connect them is to use an hacked USB gamepad. I'm pretty sure you can find an old one at some garage sale for a few bucks.
I personally used (btw, hello there, I will present my new projects very soon ;-)) "Thrustmaster Firestorm Digital 3" gamepads, bought them for 8 euros each. They are easy to hack (nice wide tracks to solder on).
You could go for a keyboard hack too but new keyboards have tiny tracks, it's very hard to solder them. BUT, keyboard hack IS the cheapest way to connect arcade controls, you can always find a dead keyboard somewhere.
I also think buying a used cab is cheaper than building your own. I had mine for 50 euros (the monitor was dead but as you said, people are giving CRT TVs or monitors away, that said a friend was moving a gave his 19" CRT monitor to me). Don't forget to consider the tools cost, you need a bunch of tools to build you own and your budget will explode immediately if you don't already have them.
I've been thinking about using a Rasperry Pi computer too in a cab, I think that's the future of retrogaming ;-)
Anyway, good luck with your project, I'm curious to see how a Pi can handle mame or other emulators.