When shopping for a monitor for gaming or multimedia you will see manufactures brag about their response time. Although response rate or latency is extremely important when it comes to games, the manufactures derive this number in various ways.
Generally, manufactures report their fastest time, whether that is gray-to-gray or active black to inactive white and back. They may not disclose which they used to determine their typical time. The formal definition characterizes response time as the time it takes for an LCD pixel to change from completely active black to inactive white then back again. However, manufactures often report their gray-to-gray speed (or color to color). The Video Electronics Standards Association (VESA) will soon introduce specifications to standardize response time to make manufacturers numbers more comparable.
Nevertheless, despite the discrepancies over reported numbers, response time does matter. As recent as 2005, monitor manufacturers and gaming experts were recommending a response time of under 16ms to avoid blurring and ghosting. However, a year later we are seeing response times of less than 5ms, or more typically, less than 8ms. This in turn means that game manufacturers are going to utilize these new capabilities and create games that demand this faster response time.
For now, to view your games at their best, look for a monitor with the fastest time possible; it does matter. Keep in mind that display quality is also important, so look for a high contrast ratio and small dot pitch coupled with a powerful graphics card to give you the best view possible.