I actually have a side by side cocktail setup. I like Space Invaders 2 as a head to head game because it's easy to invert the left and right on the player 2 controls.
I love playing against someone in real time. It just seems much more fun than against a computer. It's difficult to find "head to head" games that aren't totally inverted on the player 2 side though. I suppose I should have built a head to head cocktail. Maybe that can be cabinet #3. #2 is going to be a copy of 1up's cabinet.....
someday. 
Can you use joysticks with Demolition Derby or does it need two spinners?