Itellij stores the cache, system files etc. in your profile folder "C:\Documents and Settings\xxxx\.IntelliJIdea" .
But many times this occupies as much as 1 GB which reduces the performance of the System.
1. So I moved the "C:\Documents and Settings\xxxx\.IntelliJIdea\System" folder to "E:\.IntelliJIdea\system" keeping "C:\Documents and Settings\xxxx\.IntelliJIdea\config" folder as it is.
2. Then changed the idea.lax which is present in Idea Installation directory/bin . For me it is in "E:\SynDev\IntelliJ-IDEA-4.0\bin"
I changed the highlighted part below.
lax.nl.java.option.additional=-Xms256m -Xmx1028m -Dsun.java2d.noddr
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