Cooling
When increasing the speed of any computer components you are making the
components work harder and by doing so they output more heat. Heat can
cause system instability so cooling is necessary to help keep your components
stable at higher speeds. Without good cooling you could harm or shorten the
life of your system. CPU temperature can usually be checked from within the
BIOS. However, these are inaccurate as your CPU is under almost no load in
the bios. SiSoftware Sandra may be used within Windows to check temperature.
This should be done when your CPU has been under a heavy load for a while
for optimum results.
There are three types of cooling that are generally accepted for overclocking:
Air, water, and peltier.
With both air cooling and water cooling some type of transfer material is
needed to move the energy away from the sensitive electronics. The device used
for this purpose is a heatsink. The two most popular heatsink materials are Aluminum
and Copper. The heatsink that is stock on factory computers by major
manufacturers (Dell, Gateway, IBM) is usually made of aluminum, which has
satisfactory heat transfer characteristics. However when overclocking more heat
is being produced from the increase in power consumption. In order to obtain
lower temperatures a material with better heat transfer properties is important
and copper is the material that offers the best ratio of price/performance.

Power
Chips at higher speeds may need more power. Raising the vcore voltage on a
CPU might enable it to go at slightly faster speeds but by doing so you add
a lot more heat output from the CPU. The vcore of a processor is the voltage
at which a chip is set to run at with the stock speed. This voltage may need
to be changed when the multiplier is raised because otherwise the transistors
in the chip won’t switch fast enough—transistors switch faster the higher the
supply voltage. If there is not enough voltage then the chip will begin to make
mistakes and give bad data results. Good cooling is needed to keep the system
stable at higher speeds. Raising the vcore too much may harm or shorten the
life of your system. Raising the vcore can also greatly affect the stability of the
system. This is where a high quality PSU will come into play. While many
cheap, no-name brand PSU’s will crash and die with more vcore, a good quality
one will live to serve you for a long time.
Note: increasing the speed (multiplier or fsb) without changing the voltage
will also increase heat output, but not as much as when also increasing voltage.
Having said that, increasing the multiplier or FSB without adjusting the voltage
may make your system unstable (undervolt).