I just played for about 3 hours and experienced my first crash. I hope this is not a sign of things to come. I read somewhere that it is a good idea to clear your cache on the 360. Is this true and if so how do you do it? Also, is there any benefit to installing the game on the 360? Would this help prevent crashes?

Did you think to feel the console for heat when it did crash? Just a hunch.

I've played other games for 5-6 straight hours with no crashes. It was just once, hopefully no big deal.

the best thing to do is to clear your cache and install

What exactly does clearing the cache do? And how do I do it?

Other games are not NV. It's a good datapoint, but don't use it as the only consideration before discounting something. It doesn't hurt to look into it!

I cleared my cache and I am installing the game. Will check heat levels as well.

To clear the cache, go to the dasboard -> system settings -> memory. Highlight the memory device if applicable (your hard drive I assume), press Y, and then select the option "clear system cache."

Another tip: when you turn your console on, hold down the A button and don't release it until the dashboard comes up (or until your game loads if that happens first). Beth advised players to do that with Oblivion to nullify cache fragmentation or something like that and it might help for you here as well since NV uses a modified form of that engine.

Be careful clearing your cache. I just did this about a week ago. I go to load up my Oblivion save on a 200+ hour character. "Save was corrupted" Will not load. Lost everything. I go to load up my 150+ hour Fallout 3 character "Save was corrupted" Lost everything. ARGHH, it's from clearing my cache, it was just fine before I did that. This is on the xbox 360. I've already read about of a lot of people suggesting to clear ones cache on this forum. This means that most likely the game is a little buggy for now. Not that there is something wrong with everyone's cache that works just fine for every other game at any other time. So scrap the whole clear your cache thing. I'm sure there will be some kind of update in the future.

How to clear Cashe http://www.360-hq.com/xbox-tutorials-59.html
Did you install it thats always a good idea for a game you will play for 8 hours at a time

Did you make sure to redownload all the extra content for your fallout 3 game and oblivion? When you clear the cache, it clears out all downloaded updates and dlc (among other things). If you had any dlc for either of those games and the saves used the dlc, then they won't load after a cache clear until you redownload the dlc (you won't be charged).

Just a reminder since I am sure you read the instructions in the link that described the cache clearing process...