that was my next question. How are you going to know what setpoint you set... but i guess yes you can do it with a infrared monitor. still you should have a small amount of delay so the loop doesn't run too fast delay(1) or delay(5) shoul be fine...
As for the capacitors you will have to experiment. The value depends on the resistor value. in your case i voul use a normal 100nF capacitor or something around that value. Delete the delay in your code and put a capacitor like i draw a few posts back and test it on a serial monitor. if the number increments of decrements when te button is pressed your ok but if it jumps a few numbers increment your capacitor value.