You probably won't notice much of a difference between 32mb and 64mb caches.
Like geofelt said, you will notice a difference between 5400, 5900, and 7200 rpm drives though.
And likewise, using an ssd is like night and day compared to a mechanical hard drive.
But if you don't need blazing fast speeds, then go with a mechanical hard drive. Going 32mb or 64mb is really up to you. The price between the two types should be too much different. In fact, just doing a quick check of 1tb HDD's on NewEgg - I saw virtually no difference in price between the two types when looking at the same manufacturer/model. (so go with the 64 mb ones)
EDIT: Well to be honest, if you're concerned about space and you have a strict budget, I would buy the 500gb HDD and forgo the SSD. The SSD will only make a negligible improvement in gaming performance and you'll only notice decreased load times when loading maps/levels. In terms of playing music and opening programs, you would probably notice the ssd's quicker speed. Again, if you're worried about space though, either get an ssd (preferably 120gb) and a 500gb hdd, or just get the 500gb/1tb hdd.
Hey Phym, any SSD will have incredible performance. If you aren't using it in a laptop, then you can get an SSD now and an HDD later, giving you the best of both. If 120GB won't be enough at the time of purchase, you can go the other way, and get your mass storage now and an SSD later (which means double the work with installing your OS).
If you can handle only having 120GB, do it, then, once you work up the money, get a 500GB.
Should i buy the 500GB hdd for the price or 120GB ssd for the performance? Cus I dont think 120gb will last me for long.
A 120gb SSD will hold the OS and 6-10 games. It will make everything feel much quicker. It is one of the most effective performance upgrades you can make.
If your storage needs include large files, like video's, then you really do need a large hard drive. Larger drives, in the 1tb+ range are a bit faster because they are denser.
A SSD will help gaming with level loads, but not much else.
The amount of cache on a hard drive is a design tradeoff made by the engineers. Whatever size the drive has will be appropriate to the characteristics of the rest of the drive. Sometimes, I think the larger sizes are a marketing ploy, designed to justify a higher price for the drive. I would exclude cache size as a decision criteria.
Since hard drive prices are still historically high due to the Thailand floods, I suggest starting with a SSD and adding a hard drive
later when you need expansion.