Lots of games are particle board. Anything Atari is going to be particle board. I've got a couple in really nice shape, and I've had others that were a total loss due to moisture damage. But, as long as the cabinet is in decent shape when you get it, there's nothing really wrong with being made out of particle board other than the fact that they weigh a ton.
Some games aren't particle board - they're MDF. (Think "really thick cardboard") That stuff is just as bad. It fuzzes and frays and swells. Galaga is made out of MDF. Again, if you get one in good shape, it's fine, but many aren't in good shape.
The plywood cabinets are arguably the best - stuff like Ms. Pac-Man, Williams games, etc. Of course, plywood isn't perfect either, it delaminates and chips/flakes apart at the bottom if the game is slid around without leg levelers. The advantage to plywood is that it's easy to glue back together, it doesn't just absorb moisture from the air, and it's a lot sturdier. On a few games that were badly splintering at the bottom I was able to just squirt glue in between the layers of plywood and clamp it back together. Then, once it was dry, I installed that aluminum edge channeling on the bottom, to keep it from splintering more. Not original, but a good way to hide the damage.
-Ian