They don't make 120 Hz IPS panels or 120Hz monitors with 2560x1440. (It's a limit of the current cable standards, HDMI/DVI can't handle anything larger than 1920x1200@120Hz). If you want 120Hz, you're going to be sticking with 1920x1080 and a TN panel. It won't look as good as an IPS panel and the resolution is lower, but motion would be smoother. I hear that some people don't even notice the difference between 60Hz and 120Hz, while others can't stand going back to 60Hz, so you may want to check one in a store first.
1920x1080 with lots of AA on a 24'' screen will look similar to 2560x1440 with no AA on a 27'' screen. You're getting similar quality at a larger size with 2560x1440. 2560x1440@27'' is going to look noticeably better...