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Yes it'll work.
Dual monitors is independent on the size. Though you might have to place the secondary on the right side only, I've found it to be a pain in the *** to get Nvidia drivers to handle a left sided secondary monitor (you could make it the main, but then you'd have to use it for games which defeats the purpose of the new monitor.
As for a 20.1 inch widescreen, only one good choice right now and that's the ViewSonic VX2025WM. Great monitor and can hade for under $330, which is a great price for what it offers.
Newegg is currently out of stock for them, but they should be coming back soon and could be at the other usual places.
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