I dont know if I should use the httpcontext caching or the Enterprise Library Caching Application Block. Also, what is the best pattern for the caching Strategy when deleting or updating an entity that is part of a cached list?
Should I remove all of a list from the cache or only remove the item from the cached list? If I update it will I remove the list from the cache or update the entity in it.
There are several approaches to implement caching,httpcontext being the easiest one, but it's not necessarily the worst. Take a look at memcached or MS Velocity, both of which can be used as backends for the ASP.NET Cache. Especially memcached has a reputation of doing a really good job.
As for caching policy: you have to decide what works best for you.I personally would remove the complete list from the cache upon update/delete rather than trying to find out whether the entity is in the list, since it takes a non-trivial amount of time and you need to take concurrency issues into account (locking the list, since somebody might do an update/delete of another entity). Sometimes it does make sense to update an entity in place (if you have a complete object with all data you need), sometimes it's a waste of time, because due to some state change the entity should move somewhere else (e.g. when you sort by LastChangedDate etc.)
Don't forget to optimize your DB code too so that it does not take too much time to refresh the flushed list.
Having done some testing with both I did a full review of the caching application block in the context of our code and blogged my experience with it. It's very simple to use and powerful enough for our needs. I would recommend it, my results were blogged here.
In your position I would use the Repository pattern to maintain my cache, it works well for database datasets and should work equally well for the cache in your own. If you're not familar with the repository pattern, check out this post from Steven Walther.. I would tend to disagree with the previous answer however, taking out only the items you need for modification and laeving the rest untouched. This will allow you to expire items from the cache independantly from the whole list should you so wish.