I dont know,
gmaxwell DnT suggested it when
I someone else had problems with memory
and it worked like a charm. Let me dig that thread up. See the thread linked below[1]. I remember that it reduced the amount of RAM my node needs, while I had problems with 2 GB before.
It used to be that Berkeley DB was used for the wallet, block indexes and tx indexes. -dbcache affected the in-memory cache for Berkeley DB. Version 0.8.0 moved the block and tx indexes to Google's LevelDB (it's faster), and kept the wallet in Berkeley DB format (presumably so that the wallet.dat format remained unchanged for backwards compatibility). In 0.8.0, -dbcache affected both the Berkeley DB and LevelDB caches.
The patch referenced above was introduced in 0.8.2, and it modified the -dbcache option so that it only affected the LevelDB caches (since the wallet is relatively small, there shouldn't be any need to adjust it's cache size, so it was hard-coded to 1 MiB). The default -dbache in 0.8.0 was 25 MiB.
Version 0.9.0 increased the default to 100 MiB. It has a hard-coded minimum of 4 MiB (and a maximum of 1 GiB on 32-bit machines, 4 GiB on 64-bit machines). I'd imagine setting it down to 4 MiB would have a noticeable affect.