This CVar is not used together with gxApi "d3d9ex", only "opengl" and "direct3d".
If gxTextureCacheSize is set to 0, the client will try to pick a reasonable default value for your settings.
From a Blizzard's response: gxTextureCacheSize should be set to something under what your graphic card has direct memory access to. If it's a 1 GB card, you should maybe give it something under that, like 800 if you're doing nothing else on the card. If you multitask and you're on Vista or 7, it's best to use a lower number or let the game manage it on its own. Keep in mind that gxTextureCacheSize only functions in d3d9ex mode.
To allow 128MB of GPU memory to be used for textures, add the following line to your Config.WTF file:
SET gxTextureCacheSize "128"