I found out about this arcade project in a comment on one of my MAME cabinet blog entries. It looks like they're building a pretty neat little cabinet there, and hitting some of the same stores as me. You've got to love Canadian Tire. They're a little further along on the cabinet end, so I'm going to give a read and see what problems they've encountered.
I am still undecided as to what material I want to use for the cabinet. The plywood option is expensive, but would certainly be the lightest and strongest. MDF is really heavy, and I don't like the way it tends to chip easily. It also tears around screw holes too. Of course, the plywood can be a little harder to work with, and it's easy to chip the top veneer. And there are all kinds of people all over the net building cabinets with MDF, so it can't be that big of a deal.