Cache memory is the data buffer or cache between the hard drive and the actual platters in the drive where data is temporarily stored. Access to data in the memory cache is much faster than accessing data on the platters in the hard drive. The larger the memory cache, the more data can be stored which can be accessed faster. A drive with 16 MB of cache will perform faster than a drive with 8 MB or 2 MB of cache because more data can be stored in the cache on the 16 MB cache drive.
For more information see this article on Wikipedia, Hard Disk Buffer.