The company down the street seems quite happy to shell out another $200-$300 to keep that $120,000/year developer happy. If your developer is any good, maybe he'll just go work for them.
In this market? I'm guessing you're a developer who hasn't been looking for a job for some time rather than an employer.
But for what it's worth, I'm an employer and I try very hard to ensure all of our developers - particularly the coders - always have two matching >=22" widescreen monitors. As a developer myself I'm perhaps more easily persuaded of the productivity gains than most bosses. That having been said, very, very few developers understand the cold hard realities of squeezed budgets, tightened belts and the pragmatism sometimes required in a tough marketplace. If you've made a good argument and your boss is still resisting, he may well have a very good reason beyond the price of just one screen. Think about it.