Hi
Yep, basically what it does is loads the information from the HDD into RAM, so that when stuff runs it runs from RAM not the slow (By comparison) hard drives
Memory vs Hard drives (I put this comparison together a few years ago so everything is faster but the concepts are the same as both the drives are faster but so is RAM in the same ratio)
-The slowest point on a DB server is drive access, a 15K drive offers 125 Meg per second of sustained transfer and a average read write of 4 ms
-This compared to server memory with a read/write of 8Gigs per second & access times in the region of 0.001 – 0.010 ms
So ram is up to 4000 times faster on access and 64 times faster to read from
Looking at these numbers you can understand why if you had your previous cache set to a gig and it is now gone why your performance has plummeted
Now onto data loss:
Yes, data is not committed immediately into the database,
The person you are talking to is incorrect, the system updates the disk after a transaction is committed so worst case you can loose the last transaction or 2 that is currently in process should there be a failure, I dug this up to confirm it support.microsoft.com/.../874296
"The modified data will be written to the DBMS cache, and not to the disk. When this client completes the write transaction (that is, commits the changes), the data in the cache that was modified during the transaction will be written to the disk. The cache is then said to be flushed. The DBMS cache always contains the most recently used data. The cache is continually updated with the relevant data from the database."
What you need to worry about with the classic database is that it cannot automatically recover from a power failure during a write to the drives and this will happen regardless of the size of your cache, you just need to ensure you are on a UPS and making regular backups
So pump the cache up to 1024 Meg because it has to be there for your system to run properly (And must have been there before the upgrade or you wouldn't have seen the slowdown) and in terms of system stability it will make you no worse off
You should also seriously consider moving to SQL to get 64bit, better memory allocation, automated backups, automatic recovery from most database write failures (Whereas the classic db server just ends up with a corrupt database), automated maintenance.....etc