In the latest of his series of "Quickie Tutorials" today, Justin Silverton has this new post about the caching of Smarty templates in your application (as taken from the Smarty manual)
Since templates are dynamic, it is important to be careful what you are caching and for how long. For instance, if you are displaying the front page of your website that does not change its content very often, it might work well to cache this page for an hour or more. On the other hand, if you are displaying a page with a weather map containing new information by the minute, it would not make sense to cache this page.
It goes through the usual steps - what configuration options you'd need to change, an example of the code, and some tips on how to get the best performance out of your caching.