CAF: Composite Application Framework development enables you to create Web applications and portlet application projects for use with My webMethods Server. A Web application is an application that a user accesses over the Web on either the Internet or an intranet.
When DSP? : When you have little to do in UI, minimalist approach. Maintenance/development of DSP is tough as not validator available, like HTML.
When CAF: When you need to come up with a full fledged web application or a complex UI with multiple conditional UI elements.
Hope this helps.