Is this a good gaming monitor? It is a Sceptre brand so I guess I can trust them.

http://www.sceptre.com/Products/LCD/Specifications/spec_x9cNagaV.htm

The one thing that I like about this monitor is its 16.7 colors. I guess that means it's an 8-bit monitor right? I am planning on buying from newegg.com or tigerdirect.com. I just want a monitor that has good picture quality and fast response time. Should I get this monitor or can anyone recommend one that is better?

16.7 million colors is 32-bit. It looks like an alright monitor. 8ms is the highest response time you would want on a gaming monitor.

Is it worth getting even if I could a monitor that is 16.2 colors with a lower response time for the same price?

I have the Viewsonic VX922 and it has 2ms response time. It's great for games.. http://www.newegg.com/Product/Product.asp?Item=N82E16824116375

8ms mil-sec or lower would be better. LCD Monitors is the way... Those sold at Wal-Mart under IPower are very good to excellent. I should know I got one for gaming very clear and sharp colors and ms was quick. You don't have to spend a lot to get something good. I got one from Target sells WH 19" LCD Widescreen with HD with DVI connector. If you have video card with DVI you should get LCD with one..

19" LCD min
19" LCD Widescreen will look like 17" LCD Height wise
20" LCD Widescreen will look like 19" LCD Height wise

Your gonna be screwed with these LCD screens, because the highest refresh they can do is 75hz,

With 75hz you get laggy mouse movement, You need a LCD dat can do 85hz @ desired game rez, or else theres gonna be lag and delay in mouse movement in FPS gamez,

I can highly recommend this monitor, it's what I have, and I play a lot of games. 5 ms response, wide screen, height the same as a 19" lcd.

http://www.newegg.com/Product/Product.aspx?Item=N82E16824009102

As to refresh rate, I have always thought that it was not a concern for lcd monitors. This link supports that, read the fourth paragraph down.

http://www.necdisplay.com/support/css/monitortechguide/index04.htm

There are few if any LCD that can do more than 75Hz at any given resolution (especially at their native resolution which is the most important). It's only now that they've come up with a technology capable of 100Hz on LCD monitors & that's not mainstream yet.