We've recently gotten some LCD displays that I haven't been thrilled with the quality on. The first was a Dell S2409W--hey it was only $300. What did I expect? The display is crisp, but the colors are clearly washed out. It replaced a 20" Dell Ultrasharp (It think it was the 2005 model) and the colors weren't as good on the new one. Next came, a new 20" iMac. Same thing--washed-out colors. I also noticed a noticeable viewing-angle effect--as you move off-axis, the colors go off and the contrast drops. (BTW, the display on the 24" iMac is supposed to be much better than the 20".)So I've been trying to do some research on the web. I'm not an authoritative source on this, but here's what I've gleaned. The lower-quality displays are probably using a technology called TN for the panel. These are much cheaper than some competing technologies for LCD displays. The best is supposed to be IPS displays--Apple uses IPS displays for their pricey Cinema Displays. There are other technologies out there too that are better than TN, for example our Dell Ultrasharp 2408WFP display isn't IPS, but another technology called PVA. If you really want to know the ins and outs of these LCD display technologies, there's an article at Wikipedia.
Unfortunately, manufacturers don't always tell what kind of display technology they use. One clue that you are getting a TN display is that the viewing angle will be lower than 178°. For example our Dell 2409W lists a display angle of 160° / 170°. Dell is good in that they tell you straight-up that it's a TN panel too--duh, that's why it's half the price of the Ultrasharp 2408 24".
One thing that the Wikipedia article says is that TN's displays often don't natively show millions of colors. They often use 6-bit color vs the 8-bit color needed to display millions of colors. My memory of binary math, says that 6-bit displays have about 1/4 of the info on color as an 8-bit.
So in summary, there are a lot drawbacks to the cheap LCD's that use TN displays. If you aren't doing critical color work on the monitor, then it might be OK. I wouldn't do a lot of graphics work on it. I definitely wouldn't use it to color correct your next video. LCD display technology is complex and there are many issues that go into making a good (or bad) monitor. But you should definitely know up front what you are getting when you pick a TN display.
One scenario were I think using a TN panel is OK is as a general workspace. Say you are doing video and have a good external video monitor. The external video monitor is where you do your color correction--so your LCD computer screen's quality isn't critical. It may make more sense to spend you computer screen dollars on a bigger workspace than a smaller screen with a better quality image.
Comprehensive List of S-IPS Based LCD Monitors
This website lists some monitors that use a good display technology, S-IPS.
Macworld Review: Apple LED Cinema Display
Apple's new display is not only IPS, but it also uses an LED backlight, which is a whole new technology for desktop displays.
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