How to use Google Earth to accurately display geocaches
Google Earth (www) is a powerful program that models the earth in 3D with aerial or satellite photo overlays. It also can display things like roads, businesses, and driving directions. Additionally, if you download the "Google Earth KML" from your geocaching.com profile page (it's on the right-hand side column), you can view the approximate location of up to 150 geocaches at a time in your Google earth screen.
KML file inaccuracy
At first, you might think that this KML download is all you need to find geocaches without a GPS. However, you quickly notice that when you zoom in, the caches seem to jump about. This inaccuracy was designed into the KML file. Every time the "camera" in Google Earth moves, the KML refreshes, and the geocaching.com server sends new coordinates for each icon. The locations where you see the geocaching icons are never at the actual posted coordinates, they can be off by tens of meters! Therefore, you can trust the KML file to give you a good representation of caches in a specific park or general area, but you will never be able to pinpoint the exact spot.
Compare these two screen shots from Google earth. They were taken a couple seconds apart. The user of Google earth merely zoomed in a little bit then back out. In the images you can see a placemark where the user manually entered the posted coordinates for a geocache. You can also see the KML-generated icon, quite a distance away. Notice how the icon moved between the two screen shots.
How to overcome this
The best way to overcome this inaccuracy is to not rely on the KML for precise location data. Either copy the posted coords off of the cache page and paste them into the search box in Google Earth, or you can import GPX or LOC files. This will give you accurate locations in Google Earth that you can trust, unless there is a problem with the images. . .
Google Earth image inaccuracy
In some areas, the Google Earth images are not properly calibrated and don't actually line up properly with any overlayed points. Even if you get accurate points into GE by manually entering coordinates, or by importing GPX or LOC files, the image may be off somewhat, and you may find yourself searching under the wrong picnic table or whatever landmark you thought the cache was near based on the picture. A good test to see if this is true in the area you are looking at is to enable the display of roads, and then see if the overlayed road lines up with the road in the image. If not, you have a problem.
Below is a screen shot taken from Google Earth showing how the roads don't line up between overlayed road lines and the roads in the image.
How to overcome this
One way to overcome the inaccuracy of the built-in GE images, is to get GE to use a different set of images. Installing 3Dsolar Google Earth addon will allow you to choose USGS topo and USGS ortho maps (among others) instead of the default GE images. In practice, these images are calibrated much better than the stock GE images, and you can usually trust them to be more accurate.
Compare the two images below. The first is the default GE images, the second is the USGS ortho using 3Dsolar's addon. The cache is actually at the location shown in the second image. These images also show the KML icon, which is way off (as usual).
A combination of using USGS ortho maps provided by the 3Dsolar addon and using manually entered coordinates or gpx/loc files instead of the KML can easily give you results accurate enough to find caches without a GPS.