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Reading from a cache on the hard drive will always be faster than downloading things from the internet. There are no routers, network hops, or servers to deal with. It is straight from your hard drive to your screen (ok maybe not "straight" but still).
But like you said if you have broadband it is not necessary to have a huge cache. You might save sometime downloading things but for most sites it will be hard to notice any difference between pure download and part-download/part-cache browsing.
Some boradband ISPs do limit the amount of bandwidth, I think ( I am on a college campus so I don't know the reality of being in a contract with a commercial ISP) you can use per month. If this is so, it might be a good idea to have a larger cache size than normal so that you don't use up your limit. Many browsers let you specify how often to check the internet rather than going to the web. IE only has a single setting that covers everything. Opera lets you specify how often to check most specific things. So you can set the time limit on pages to one thing and images, which might not change as often and have a tendancy to be larger, to a different time.
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