DNN has a wrapper for the Asp.NET cache - the DataCache class.

If you are caching content in your module, you should use this class (especially if you intend to sell your module).  This is because the DNN wrapper can handle web-farms and persistence over Application restarts.

The module caching (that is configured in the Module Settings) is a separate caching process, whereby the module is rendered, and the rendered html output is cached - either in memory or on disk.  When DNN determines that it should be loading from the cache, it loads the previously rendered content, rather than processing ANY of the modules logic.

Note:  Module Caching is ignored for any user who has EDIT rights to the module.

Depends where the cachng is done...

if it's done on an output level (like module caching does), you will have problems, on the other hand if it's done on the logic side (for the lack of a better name)... e.g. GetListXxx in your code behind or BLL, then it will work.