I have a VG191 - they are down around $900 currently - a great deal. Yes, pixel pitch is tighter on a smaller screen but you get less real estate. The 19 lets you operate several windows easily. Text is crisp without being tiny (maybe you have younger eyes than mine, but I switched from a 19" CRT, gained real estate and gained clarity).
Unless you have a super video card currently, you should consider a DVI for the extra crispness it provides. I'm using a Matrox G550 since I barely game, but some of the GF3s supposedly do well also.
I think the 191 has better response time than the 181. The Dell 2000FP is apparently really sweet, but at the top of your price range. You could get a 191 and a top line gaming video card and still be shipped on budget...
In theory, there is no difference between theory and practice; In practice, there is.