There was a benchmark somewhere that showed 128 L2 cache, 256 L2 cache, 512 L2 cache, and 1MB L2 cache K8 processors all in one benchmark at the same clocks. I cannot find it unfortunately, but I can tell you the results. Quite simply, there is a tiny difference between 128K and 256K, and a tiny difference between 256K and 512K. The largest difference performance wise was 512K to 1MB. So simply, think of the performance difference between 1MB cpus and 512K ones, only a bit less, and you have an idea of how well the 256K processors will perform.
A 2Ghz 256K AMD64 will outperform a 1.8Ghz 512K AMD64 and cost around the same to make, so it makes sense to use the lower cache processor.