Oh, for the record, since nobody directly and completely actually answered your question.
Tools/Internet Options/General Tab...
the 'Temporary Internet Files' section is the one you're looking for. Under advanced options you can do things like specify how much space it's allowed to use on the hard drive, etc.
I'm on broadband, so I dont recommend allowing it to use tons of space, UNLESS YOU ARE ON A BANDWIDTH PLAN. If your on managed bandwidth, you'll want to allocate a fair amount to the cache, so that it doesnt constantly redownload pages. I've got mine set to 50 megs, which is more than enough space to cache pages. It used to be 5 megs, but I decided to show my provider a little mercy
Oh yeah. Mozilla for the win
I use IE for exactly two things. Windows Update, and a particular web game I play that needs it. Other than that, it sits unused, cause I got tired of having to deal with security worries. (activex, etc)