So, my solution:
1. Military trunk (military because I'm a man)
I got this at a thrift store for $50. I believe it's from the 50's or 60's. It has USMC spray painted on the top and sides. Wood frame and then aluminum (or something) completely covered around it (riveted everywhere). Very sturdy. I took a couple of 4x4's and glued them to the bottom to raise the trunk to sofa height. I painted the 4x4's the same blue as a wall behind the sofa.
2. 19" LCD Monitor mounted to the inside lid of the trunk
You can see the 4 bolts in the top. They go through this TV bracket on the inside. It took a little measuring to get it positioned right so the monitor would fit in
3. X-Arcade dual stick
I got this on sale somewhere. I don't remember where but I think I paid like $75 American States dollars for it. When comparing buttons and joysticks and an ipac, you're looking at $100 anyway.
4. Computer to run MAME (with the Hyperspin front end)
I found a small form factor dual core PC on ebay for like $80 with shipping. Runs Windows XP and I setup MAME and Hyperspin on it. I have Hyperspin shelled so the computer boots into it. I set the power button on the computer to go to standby when pressed and this seems to work flawlessly and is almost instantaneous on/off.
If you look at the picture of the trunk closed, you'll see 3 other silver bolt heads. These are for a bracket so the lid doesn't close on you while playing....I mentioned I had three kids and so more importantly they don't lose fingers.
The inside could be prettied up a bit more. Maybe some old school arcade stickers and more black paper or spray paint. I don't know how long this took for me to do but it wasn't more then a couple hours really. The software side of things probably takes more...particularly the Hyperspin setup.
I should add that the wood you see on the inside is a 4x4 I glued to the top of the computer. It's positioned so the X-Arcade sits on it which perfectly holds it in place. Another small piece of wood is glued on that 4x4 (toward the rear) making a little seat/barrier so the X-Arcade doesn't slip off while playing.
That rug is a cheap-o Ikea rug (kids spill things constantly and expensive rugs will not do) and the power cable runs under it, to an outlet behind the couch. So there's a hole on the bottom of the trunk and the rug itself for the power cable to run up through all hidden like.