My opinion is that a 21" TV is the perfect choice for an Arcade cabinet. I think that the 27" arcade monitors are way to big.
What you should be aware of when using a TV for real arcadegaming is:
1. Do not use flat CRTs, use the normal bowed.
2. Beware that many "small" TVs has only composite and not s-video inputs.
3. To be able to display "Real" arcade resolutions the TV must have RGB inputs, usually only available on Scart-TVs in Europe. You may also have to adjust the overscan on the TV (the overscan is normally up to 15% and you will without adjustments only be able to display about 215-218 lines with 60hz refresh).
If you are satisfied with using s-video (I am not!), there is no problem selecting a 21" TV for your cabinett. I do not recommend smaller than 21" because you will then have problems with the definition. If you want 19", go for a computer monitor.
One last thing: The best TVs are usually the cheapest. They don