actually the monitor refresh time, 2 3 or 5 ms has the biggest influence on quality tht you can see, especially if the video card is be pushed to the limit at those resolutions, I'm running a ViewSonic VX2240W, 2ms, and I'm about a arm length and a half from it and it's almost too big, FWIW
Response time has very little bearing on the quality you actually see. Panel type is the largest factor in quality. Unfortunately, most 22 inch monitors are TN based, which is the lowest quality type of panel. Also, all 1920x1080 monitors (in either size) that I know of are TN. There are a couple of better ones available though. The Dell 2209WA uses an IPS panel, and is a nice choice (22", 1680x1050). For more money, the Dell Ultrasharp 2408WFP or the HP LP2475W are a good choice as well (24" 1920x1200).
The 22" LCD will be harder to read text because everything will be smaller.
Quality is really based on the panel technology and on the low end of the price scale you are typically left with a monitor with a TN panel.
I actually bought an Asus VK246H 23.6" 1920 x 1080 last December for limited usage. It is actually not a bad monitor overall for the price. Gaming wise it really has almost zero input lag based on more recent information that I've read about this monitor. For watching video it does well enough, but has some issues (like nearly all cheap monitors built around a TN panel). The Asus VW246H is the same as the monitor I have, but lacks the videocam.
Below is a link to my extensive (really long) review of the monitor features, gaming performance and video performance (longest section).