The cache system in Google Earth is something you rarely think about, but it’s vitally important to how you use the product. By caching the imagery (and roads, buildings, etc), Google Earth is able to provide a very smooth experience once the data has loaded onto your system.
Google Earth keeps imagery in two types of caches to help improve performance. The Memory Cache holds imagery in your RAM, and is cleared each time you start up Google Earth. The Disk Cache holds imagery on your hard drive for easier access. Incresing those numbers can help your performance. However, if you have a low amount of RAM or are low on hard drive space, you may be better off to decrease them a bit to give your computer a little more to work with.
Using the cache you can also use Google Earth offline to some degree. It’s not as robust as the upcoming Google Maps offline features, but it’s still pretty cool.
Frank summarized the system pretty well in this post from a few years ago. In part:
First, go to the menu item Tools->Options and select the “Cache” tab. You will not need to change the memory cache for viewing the cache (there is a trick for storing the cache with this setting – see below). The memory cache is set automatically based on your system’s memory. You can make the disk cache size as large as 2000 MB (i.e. 2 Gigabytes). This will give you more data to work with. Then, you need to move to the area you want data for and zoom into that area. The most recent things you have looked at will be what’s in your cache. It’s important you zoom to the closest view you think you’ll use. Turn on other layers for information you want cached (for example, ‘Terrain‘, ‘Roads‘ and ‘Borders‘ – the more you select, the faster the cache wil fill). Also, make sure you save any KML files you might want to use in files on the same computer.
The more data you cache, the sooner the cache will fill, so be cautious. If you’re going on a long trip, cache in high resolution imagery just the areas where you plan to use GE for close viewing. Avoid turning other layers if you only need imagery. It can be a pain to move around and capture an area of imagery at full high resolution and load up your cache properly.
As a general rule I turn the cache up as high as possible to help improve my experience with Google Earth, and in most cases I’d suggest you do the same.