I wouldn't have any problem with justifying the cost of a big, quality display. About six years ago, I got a 19" CRT that was the first of its kind. It cost over $1000, more than the computer I got with it. It was hard to justify the price, especially considering I was still very much a kid at that time, did not do "real work" and therefore the display did not translate to productivity = money. However, now that the monitor has been in use in three, four different computers, it feels like one of the best investments I've ever made.
Even if you are "just" a hobbyist, you owe it to yourself to have a good screen. If you make your living off the work you do on that screen, that is all the more reason to have the best. I'd much rather skimp on the computer that is attached to the screen.
Needless to say, the next time I get a display, I'm not looking at the initial cost too hard, student budget or not. 23" flatscreen is likely, but still a year or so away.
Have you considered the competing 23" displays from Benq and HP? They are supposed to be significantly cheaper (at least the HP), have additional VGA and video connectors and (I think) use the same panel. The looks are not quite as good, but depending on what you want the price differential and features might more than make up for that.
Though the 20" is nice, I'm not sure I'd want to go with that, since it's still "only" 1600+ px wide, and I might still be tempted to add another screen - but two 20":s would border on ridiculous!
Other choices to consider are dual screens, like 17" flat for instance - this can be very nice, and not cost as much as the 20", especially if you can use a pre-existing screen and just add one - and then there are the modern 22" or so CRT's. They are still very good for the price, if you are willing to sacrifice space, elegance and some power consumption.