Beings the relative dielectric constant of teflon is lower that most other materials used as an insulator (such as pvc, etc.), the capacitance between conductors of the cable will be lower when teflon is used. All else being equal, the teflon insulated cable will be able to pass signals with higher frequency content. This may be of practical benefit for high data rates (scsi: ultra2 or faster or for ide: udma66 or faster).
Teflon can withstand higher temperatures than most other insulators. It also cold-creeps: long term physical pressure on teflon causes it to flow towards a region of lesser pressure.
Paul