Patrick Mueller - ETags are not a panacea:

"ETags and Last-Modified processing is something you ought to do, if you can afford it, because it does allow for some optimization in your client / server transactions. To be clear, the optimization is that the server doesn't have to send the content it would have sent to the client, as the client has indicated it already has that 'version' of it cached. There is still a round-trip to the server involved. If you're looking for an absolute killer optimization though, you should be looking at Expires and Cache-Control headers.

[...] Expires and friends are killer, because they allow the ultimate in client / server transaction optimization; the transaction is optimized away completely."