According to this IBM Redbook Linux kernel agressive memory caching is not helpful inside z/VMs and this is presumably true for VMware VMs too !

The Linux memory model has profound implications for Linux guests

http://www.redbooks.ibm.com/redpieces/abstracts/sg246926.html?Open

Although aggressive caching reduces the likelihood of disk I/O in favor of memory access, the cost of caching must be considered: Cached pages in a Linux guest reduce the number of z/VM pages available to other z/VM guests.

A large virtual memory address space requires more Linux kernel memory.
A larger virtual memory address space requires more kernel memory for Linux memory management.

When sizing the memory requirements for a Linux guest, choose the smallest memory footprint that has a minimal effect on performance. Otherwise, all the remaining memory in the long run would be used for buffering and caching.

The general rule does not apply to some sort of servers which have special memory needs.

Database servers
Database servers maintain buffer pools to prevent exessive I/O to disk. These bufferpools should not be downsized. Otherwise performance will suffer.

Servers running Java workload (i.e. Websphere Application Server)
A amount of memory is needed to host the Java heap.