The Firefox disk cache is usually located on the same drive that Firefox got installed. In Windows it is located in the Documents and Settings folder. It usually is a good idea to have temporary directories located on a fast hard drive. In this case the hard drive that Firefox was running on was a Solid State Disk which is usually not the best choice for lots of write operations since those drives read data fast but write them rather slowly.
The main reason for moving the Firefox disk cache is therefor performance. Security could be another reason. The disk cache could for instance be moved to an encrypted part of the hard drive, a removable drive or ram disk.
The location of the the Firefox disk cache cannot be changed in the Firefox settings. The only way is to add a new parameter in the about:config dialog to change the location of the Firefox disk cache.
Type about:config in the Firefox address bar:
Right-click and select New > String from the menu. Enter browser.cache.disk.parent_directory as the preference name and the new path to the cache location, for example d:\temp
Opera users can practically do the same by typing in opera:config#UserPrefs|CacheDirectory4 and changing the preference there.
Internet Explorer users can simply change the location in the Tools > Internet Options by clicking on the Settings button under Browsing History.
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Damn! wish they had this kind of article for picassa!