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Cache size is important to your application because if it is set to too small of a value, your application's performance will suffer from too much disk I/O. On the other hand, if your cache is too large, then your application will use more memory than it actually needs. Moreover, if your application uses too much memory, then on most operating systems this can result in your application being swapped out of memory, resulting in extremely poor performance.
You select your cache size using either Db::set_cachesize(), or DbEnv::set_cachesize(), depending on whether you are using a database environment or not. You cache size must be a power of 2, but it is otherwise limited only by available memory and performance considerations.
Selecting a cache size is something of an art, but fortunately it is selected at database (or environment) open time, so it can be easily tuned to your application's data requirements as they change over time. The best way to determine how large your cache needs to be is to put your application into a production environment and watch to see how much disk I/O is occurring. If your application is going to disk quite a lot to retrieve database records, then you should increase the size of your cache (provided that you have enough memory to do so).
You can use the db_stat command line utility with the -m option to gauge the effectiveness of your cache. In particular, the number of pages found in the cache is shown, along with a percentage value. The closer to 100% that you can get, the better. If this value drops too low, and you are experiencing performance problems, then you should consider increasing the size of your cache, assuming you have memory to support it.