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bbum has posted a great howto on building an arcade controller. His inspiration was a control deck he built many years ago:

I call it the Ghetto Control Deck because the wood was found in an alley near my house (construction waste). I tore apart a broken (bad button) PlayStation One controller and used it as the brains of the controller.

Now — more than ten years after it was built — MAME is all the rage and Dave Dribin has produced an awesome port of MAME to Mac OS X. As well, USB technology has evolved such that “HID Compliant” devices are fairly common and cheap. That plus some awesome work in MAME OS X means that plugging in any HID compliant game controller “just works”.

OK — mash it all up now. Not surprisingly, there are simple devices that will enable a PlayStation I or II controller to be plugged into the USB port of your computer. Better yet, if the converter is HID compliant, no drivers are necessary and it’ll just work with software like MAME OS X.

His design even uses phone jacks so you can easily reconfigure it on the fly. He’s got a complete HOWTO over at his blog – Link