I don't see 4P controls being very useful...i don't have kids old enough to play, and there aren't many gaming enthusiasts in my daily life...so 2P is kinda what I'm leaning towards. I'm also thinking of incorporating Wii remotes as Light Guns for M.A.M.E., though this might come later. Trackball and Paddle are in my plans...but anyways, thanks for the thoughts.
When I started I was all jazzed about doing a 4-player panel but then, like you, I began to realize that it was not worth it at all. I hardy have two people at my cabinet at a time, let alone four. Add to that the 4-player games don't have the same addictive qualities as the classic one-player games of the 80's or the two-player fighters of the 90's.
If you can't seem to talk yourself out of it, you can build a cab with the traditional overhang panel (like Mortal Kombat) for two players and then the trackball and spinner in there. Make it easily removable (i.e. use some Molex connectors) and then build a second panel for 4-players that you can easily pop in there. If you follow the lines and size of a traditional "larger" cabinet (look up "NBA Jam" or "TMNT/Simpsons" on KLOV), it won't take up as much space.
Of course, it won't be terrible comfortable - though the controls are traditionally set up so you can stand at any angle and not worry about controlling the game (read: joysticks all point up; not angled.) But get concerns about "being cramped" out of your head. Trying to compensate for that is what leads to excessively large panels that do not work with the overall cabinet (i.e. outer players can't see the screen well) or, at best, take up way too much floor space and look a little silly. Consult the design and dimensions of actual 4 player panels to get a feeling of how they worked out the spacing.
(As an aside: many people shape their panels like a half octagon, with the angled sides housing the outer player controls. It works for many people but I personally never liked the look of them and have found that it actually "forces" people to stand in a particular spot which may, ironically, make things more crowded depending on the size of both the panel and the people using it.)
At the end of the day though, you may be best just going with a simple 2-player panel, especially since you have doubts about the usefulness of having a 4-player setup. Maybe slap a couple of USB ports in the front and have some stand alone controllers if the 4-player bug happens to bite.