The ISAPI cache, as the name implies, caches ISAPI applications. When it's disabled, ISAPI applications are loaded when they are called, and then immediately unloaded. When it's enabled, they're kept in memory after their job is complete.
I'm not aware of any problems caused by the ISAPI cache, but you could certainly experiment with it. More likely, the problem you're experiencing is a side-effect of the inherent problems in ASP 3.0 applications: They simply don't play well together. You can improve the reliability by configuring each application and Web site to run in its own memory space. This should reduce the likelihood that one failed application will affect the performance of other applications.
If you were the developer, I would encourage you to migrate the applications to a more robust development environment, such as ASP.NET. However, as a hosting provider, I appreciate the fact that your hands are tied, and you're forced to provide the service your customers require.
Good luck with it.
This was first published in October 2003