I almost got around to building one. Bought the oak veneer plywood, was just waiting to come across an old PC, buy a control unit, and find an old tv. After a while, I just lost interest and sold the plywood. I'd like to but it's a lot of work and all just for imitated authenticity. I still have loads of plans in digital format for building some along with links to various control manufacturers.
For an OS, I'd go with Windows XP. There's lots of various frontends you can use. One under-rated frontend is 3D Arcade which, afaik, is not in development anymore. It can function as a virtual arcade with videos of the games being played as you tour the arcade. Walk up to it, press a button, and you're playing it. If you're interested, videos can be found here. The guy must pay a fortune in bandwidth costs. But if you just mostly want utility and have a lower end machine, I'd go with another frontend. There's some that also function as jukeboxes and video players. But I've tried emulators on Linux and there's not as many and they're generally not as easy to setup.