What is the "best" option for the two Project Preference settings for:
1) Media Cashe Files
2) Media Cashe Database
A hard drive that is separate from your system drive, your projects drive, and your primary media drive. Direct all media cache files and preview files to that drive. That's "best", anyway, at least in terms of performance.
A couple of follow-up questions....since I've never really thought much about these options in previous versions of Premiere, do these files (for any given project) go away when the project is deleted or do I have to 'manually' delete these files after I delete a project? I'm asking because I'm thinking of 'dedicating' one of those "500Gig SATA HDs" to store the Cashe and DB files and I assume it would fill-up after a while.
No, you'd have to delete them. That's one benefit of storing the media cache files next to the originals, in that you can simply purge the entire directory of files when you're done with it. Splitting them up creates a bit of a file management issue, since Premiere really doesn't have a good way to selectively eliminate generated preview files. The Project Manager works to an extent, but it will still leave the originals behind. So as long as you set things up at the beginning of a project correctly, it'll make finishing and archiving the project a little easier. The good news is that if you delete a cached file that another project needs, it will be recreated automatically. Rendered previews would have to be manually recreated, however.