On my machine Google Desktop cache takes over 7Gb. As I generally recommend moving most of the data from drive C:, the cache can be relocated in a following way:

• Shut down Google Desktop Service by right clicking on it’s icon in the System Tray and selecting “Exit”
• Navigate to C:\Documents and Settings\Gregory\Local Settings\Application Data\Google\Google Desktop\ and move the folder with name consisting of random letters and numbers to another drive (you can rename it if you like to something more readable)
• Adjust the path to this folder in the Registry:
  HKEY_CURRENT_USER\Software\Google\Google Desktop\data_dir
• Restart Gogle Desktop engine