As I discussed in FIX: "WebForm_PostBackOptions is undefined" where I referred to WebResources as a possible magic-bullet for SharePoint Son of SmartPart (ASP.NET 2.0 UserControl) developers, I spent some time trying to get it working in our project. This is of course after repairing my VS2005 install (C# intellisense support refused to load after installing the Web Deployment project add-in). Anyway, the plan was to reduce the number of files I needed to copy over for a "deployment" of our product to SharePoint.
After a few hours of wondering WTF was going on (the scripts were being added but were unavailable), I chanced upon Helen's TechBlog post about WebResources aren't cached when debug is set to true in your web.config.
My research suggests that regardless of this caching isn't enabled at all on Cassini (aka the ASP.NET development server). It doesn't seem to even cache static files and it doesn't seem to matter whether debug is set to true or not. So don't stress out if you're testing caching in development and you can't get it working.
So Cassini doesn't support WebResources... and IIS6 only supports them if debug is set to false in a web.config?! Why the hell would they put those limitations in place? AHHHHHHH. (Sorry, Helen. I feel the need to stress out right now).