The cache on the Mobile Pentium III is also exactly like that of the desktop version, carrying the same 32KB primary cache and a 256KB secondary cache on the die and operating at the full core speed. For the sake of battery duration, Intel was able to achieve 900-1000MHz at 1.7V, and did not have to up the voltage of the core with these latest processors. These special packaging designs allow the chip to be used in very thin notebooks and Intel's use of an exposed die allows for better heat dissipation from the chip. These features can enhance floating point, video, sound, and 3D application performance and have been proven to increase performance with software that was written to utilize it. Faster and smaller, as good as these concepts are, is only one side of the story in the mobile market.
Power consumption is the other major consideration.
Smaller laptops are only made possible by smaller batteries. In turn, smaller batteries only make sense if the components of the laptop draw less power. After all, laptops are supposed to make our lives easier and having to recharge them frequently is not part of that game plan. Intel's task was not just to bring faster CPUs to laptops, but also to do so in a way that the chip would consume less power. For example, the new top of the line mobile Pentium III runs at 1GHz and consumes 1.7V when running off AC power but will dynamically throttle the chip to 700MHz while consuming only 1.35V when running off the laptop's battery.