2005FPW has analog, DVI, composite (yellow RCA-style), and S-video inputs, all easily switched to by the press of a button and can be put in PiP/PbP modes. As far as sound, I don't know. I thought that any modern sound card would be able to play two inputs at a time, but I hooked a VCR to my 2005FP, just today actually, cause I wanted to try out watching TV. I used a yellow-red composite to headphone jack for audio, but couldn't get any sound from the VCR source through my speakers. I have a SB Live! Value, but maybe I didn't have the right jack (couldn't be bothered to pull out the PC heh).
And btw, the TV quality was pretty good. You just can't expect to sit as close to it as you do with a monitor. Maybe some HD resolutions would be good, but at least you get the option to 1:1, fill, or aspect. I have hooked a Xbox up to it as well and it was pretty good as Fill, just sit about as far away as you would from a TV. 1 player Unreal CHampionship 2 was very good, not sure if 2 player would be too small, unless it recognized widescreen and could position them side by side... I haven't experimented with anything else on it.