dakota's explanation couldn't be better.
Yes, a 512KB cache is more favorable than 256KB in many applications today. Keep in mind that 6 or 7 years ago, that wasn't the case, which is also why large caches were really only experimented on with CPU's like the XEON. At the time, their advantage in performance was only clearly shown in server environments and didn't run at full speed with the processor.
Of course, desktop software has since come a long way. Real-world applications have now been showing the benefits of larger cache. However, it will be sometime before we know how much is too much. If I'm not mistaken, there are plans for 1MB caches in soon-to-come releases from both Intel and AMD. Eventually, however, it will hit a point of "diminishing returns" making it less cost effective than performance driven to keep increasing L2 cache.
Well, enough babbling for now!
~cdogg
[tab]"The secret to creativity is knowing how to hide your sources"
[tab][tab]- A. Einstein