For me, I found the higher refresh rate (120Hz vs 60Hz) was more beneficial than better picture quality and viewing angles. Why? I'm sensitive to smooth, clear motion. The 120Hz is much easier on my eyes, and the additional motion smoothness helps in gaming. As a gamer (and not all are like me), and I was willing to sacrifice a perfect picture for better motion quality. You can find many nice 120Hz TN panels that look quite good. While IPS can look noticeably better than TN, many exaggerate the difference (just as I likely exaggerate how much of a difference people will see between 60Hz and 120Hz) or try to compare bad TN panels with good IPS panels.
You can get some monitors that do 120Hz+ AND 2D LightBoost. LightBoost can be tricked into running in 2D mode, and it dramatically improves motion blur and ghosting. It is amazing for fast-paced games, as the screen is crystal clear even with fast motion. 120Hz without LightBoost is better than 60Hz in this regard, but enabling LightBoost takes it to an entirely different level. The downside to this is that it takes some tinkering to get right in all games, and any game using it needs to match your refresh rate (100, 110, or 120Hz with LightBoost) or else you will get judder.
I should also mention that some games are capped at 60FPS by default. This is especially true of Unreal Engine 3 games. Sometimes it is a simple setting in the game. Sometimes you have to adjust a few settings in INI files. It can vary, but it's not hard to fix once you identify which games cap the FPS and search online how to fix it. Without LightBoost, you'll want games to run at 80FPS+ to see benefits of a higher refresh rate. Otherwise, motion smoothness will look about the same as it would on a 60Hz monitor.
You also have people who value image quality and viewing angles more than a higher refresh rate and are unwilling to compromise for better motion smoothness. That's perfectly fine and understandable, as I can see the appeal now that I have an IPS monitor myself. On the downside, most IPS monitors are 60Hz.
On the upside, my 27" Qnix monitor does 120Hz, and I use an ICC profile to correct for the gamma changes the monitor OC produces. I literally get the best of both worlds, though I don't get LightBoost (I have a 2nd monitor for that, and only some modern games run at a stable 100FPS+ on high settings). However, OCing these monitors has no guarantees, but it seems like almost everyone can push them to 96Hz at least.
Now, as for resolution, I love the jump from 1080P to 1440P. It is a good bit more taxing on my system, though, so that's something to keep in mind. I think you'd be OK with your rig if you wanted to go to 1440P, but you could expect to turn down the AA and maybe a couple other minor settings to keep your FPS at acceptable levels.
If you haven't had the chance to use a 120Hz monitor, even if just on the Windows desktop, I would recommend you do so. If you have to look for the difference in motion smoothness, you might not be able to notice or appreciate the higher refresh rate (some can't, and that's OK). I would also check out some nice IPS panels. It's up to you to figure out what works best for YOU, as there will always be some sort of compromise with monitors, at least for now.
Edit: If you are the type that easily notices the frame interpolation on 120Hz TVs (that really gross, fake smooth motion), you should notice the same difference between a 60Hz and 120Hz monitor. Except, in this case, you're getting true 120Hz/120FPS vs fake 120Hz/frame interpolation. It's actually good, that is.