I own a Phantom 1. I bought it new one year ago, and it was the latest version at the time.
All the MVS games I have tried work. The only graphical problem that I have noted is with games that have the zoom in/out effect. These games sometimes show white pixels when the zoom is working. It happens a lot with Sidekicks 2. I have heard the same about other people, and it seems to depend on the version of the Neo system that you have.
About the chips. The top part of the Phantom is like two AES system inserts/slots, that is to say two large rectangular insertions framed by black hard plastic. Inserting a cart into a new Phantom could be very hard, and pull it out could be even worse. Accordingly, you will need to inflict a lot of pressure to insert a game, and to pull it out with a lot of strength, this will be inevitable due to the tightness of the said frame plastic.
Some games fit smoothly than others, but sometimes, depending on the game, they won’t fit easily or at all (very rare). That happened to me with MS 4, it was impossible to insert it, so I even had to file down or smooth over MS 4’s contacts. But when I pulled it out one of the black frame plastic edges chipped, so I “superglued” it. Another day, with another game, another edge chipped, more superglue...in the end I passed of “superglueing” it anymore.
Does this affect anything? Yes, now I have no problem when inserting and pulling out carts, thanks God, it feels loosen.
Chipping the Phantom will depend on the tightness of the one you get and the MVS carts you get too. Even if you are a sensible and cautious person the risk is always there. If you do not want to force it perhaps you would not play certain games, and if you do you may break it, but in the end it won’t matter, in fact it’s better.
I think that a Phantom is the best way to go if you just want to play Neo Geo and not other arcade systems/boards. Its very easy to use, plug (with some effort) and play. No cables no nothing, and you will save on space. Besides, if you are into collecting, it is a good way to not scratch your MVS games.