I read somewhere that if you have a 1 MB cache and you use the onboard video, the video memory shifts from RAM to Cache, freeing up about 600 KB of RAM and speeding up the video. The remaining 400 KB or so of cache is still used as cache.
See http://lowendmac.com/benchmarks/6100.shtml
Adding 1 MB cache boost graphics performance 29% over no cache, 27% over 256K cache.