Yes, it's safe to delete but it is recommended that Disk Cleanup be used to
remove it (see article link later in reply).
The folder holds the setup files for the Office components that you have
installed. They will be used to perform "on the fly" repairs and to install
components that were marked "install on first use" during Office setup. A
nice convenience if working with a portable machine and the installation CD
is not handy. If you delete the folder, you'll need to pop your Office CD
into an optical drive whenever one of the above events occur.
Local Install Source (Msocache)
http://support.microsoft.com/default.aspx?scid=kb;en-us;825933
