Yah, I have to agree. The image on the computer monitor looks nothing like the image on an arcade monitor or TV. Lots of people run 19 or 20 inch TV's to try and get that "arcade" look. Obviously, the closer you can get your TV to looking like true RGB (component is pretty damn close, s-video a little less) the more happy you will be.
None of my friends have bought a TV over an computer monitor simply for size. They all do it because of the way things look.
Now, that all being said, menus on a computer monitor look better than an arcade monitor, simply because the text is easier to read and the screenshots are more vibrant. But that means nothing if the games look bad!