The game will be processing at 125fps, but the monitor will only be sent 60 of the frames per second.
Human eye cannot tell 60fps to 120fps, main benifit in monitors is enabling of 3d.
Please people stop repeating this myth.As someone who has a 120hz screen it is most definatly noticeable to see a smoother update compared to 60hz.In crysis warhead near the start there is a car near a rock face that when i face it i get 120fps (vsynced and triplebuffered).When i do a 180 degree turn towards a forest section fps drops to around 65-70 fps.I defy anyone who would witness this to then tell me that the 65fps looks as smooth as the 120hz,it really is VERY noticeably smoother in game never mind how much better your cursor/windows are on the desktop.
I urge everyone to stop spreading this false information regarding not being able to see above 30/60 fps .Yes i agree its pretty playable at 60 and above but when you start hitting the 120+ you begin to realise that you really wish ALL games would be able to play at this frame rate or above.
And for the record if i lower crysis details down to say around medium level i get almost constant 120 fps, and believe me it makes you weep at the beauty of how smooth it is...shame it looks like **** compared to high level and above

.Although even with highest setting i can get anywhere from 40-120 fps (mostly around the 70-80).Virtually every other game i can maintain 120 at all times i.e l4d 1 and 2,just cause,WOW(when not in lagaran of course

) and its amazing.
To anyone on the fence about getting a 120 hz monitor i urge you to at least try it out,although to get the very best out of it a VERY powerful rig is required.If you have an old rig i would not be so keen to recommend it unless you play old games that you know you can sustain higher frames rates of 100 or above.
In answer to the vsync question,whenever you unsync it from your monitors refresh rate you will ALWAYS get tearing to a greater or lesser degree.seeing it depends on the game,person and generally how far from your monitor refresh rate the game is running at that instant.In theory 120 hz should be less.But personally i DETEST tearing (very noticeable with smooth panning scenes such as beginning of levels in L4D 1 + 2) and always use vsync and triplebuffer combo.Yes in theory you get some input lag(i must admit i felt it quite badly on my last 60hz monitor on some games) but using a 120 hz i can honestly say i dont actually feel any input lag anymore.
NOTICE i say i dont feel it.Im perfectly willing to believe that some mega quake twitch gamer will say they can but for around the 95% of us normal people

at 120 hz with vsync on/tripple buffering on input lag has all but gone.
As for the 3d side of things....ive not bought it for that at all...to me the main selling point was having 120hz.I remembered how much smoother graphics were in my old 100hz crt days and this has brought it right back to me.Yes the colours arent as good as ips panels etc and the viewing angles are pretty ****e aswell.But with the asus vg236 ive just got the colours can be made to look very nice indeed(though perhaps not exactly accurate) and the viewing angle..meh im looking at it dead on and it looks fine to me (anywhere to the side or above though its poor,but again direct on its perfectly fine).
Sorry for ranting on a bit to much
Yours
Dash