Found this basic story on the Google toolbar over at Webpronews.com. It had one interesting tidbit, esentially the cached version of your website is the last time Google spidered your site. I guess that is obvious, but I didn’t know that.
When Google spiders your site it records the latest version of your site that it has spidered and this can be viewed using the Google Toolbar by going to the Page Info button and selecting cached version. Your browser must be on the page you would like to see the cached version of at the time you choose to do this.
How can this help you with your SEO campaign?
If you have optimized your website in hopes of increasing your search engine results in Google, this will indicate whether or not Google has updated their database with the new version of your page. If the Googlebot visits your site regularly the cached version of your site will be updated more frequently than otherwise.