Keep in mind that turning on caching in applications will cause them to use more ram, which means that Linux does less caching on its side. So, more cache in MySQL and web apps is not always the best way to decrease I/O. I think it's a good idea to keep about 30% of your ram free so that Linux can do its own caching.

In-application caching normally caches processed results; it's usually not intended to reduce disk I/O (the OS already handles that), but to reduce CPU load or response times.

For example, if a MySQL query normally takes one second to compute a result, and you've got ten hits per second calling that same query, you might be in some pretty big trouble. But if you cache the results, suddenly you're golden. Misconfiguring MySQL's query cache can result in far higher CPU utilization and page load times than you could get.