Do I need to cycle caffeine?
There are benefits associated with chronic caffeine consumption, and there are benefits associated with acute caffeine consumption that fade with tolerance; if you like the latter, cycling is mandatory. If you like the former, cycling is not needed.
It will depend. Tolerance to caffeine is quite unique in the sense that it isn't a mere 'increase the dose to get the same effects' reaction. Caffeine can act drastically different in somebody known as caffeine 'naive' (infrequent using) and caffeine 'tolerant' (frequent using) persons.
Caffeine has a wide variety of effects in the body. Mechanistically, some of the effects are direct (such as Caffeine acting as an Adenosine Antagonist, the molecule literally blocks the receptor) and others are indirect (any effects on dopamine are 'downstream' of the reaction with adenosine, like the latter aspects of a Domino cascade). When tolerance develops to caffeine
When Cycling is not needed
If consuming caffeine for disease prevention, it is not required for risk reduction of Parkinson's Disease nor is it required for risk reduction of Type II Diabetes. Actually, it is probably recommended to keep chronic coffee or tea (not just caffeine) intake for diabetes risk reduction, as the negative effects on glucose metabolism by caffeine are reduced with tolerance.
Caffeine is also used at times for sports. While the short-term stimulation of caffeine is something that will need to be cycled to preserve, the general benefit of caffeine seems to persist when it comes to cardiovascular exercise regardless of whether or not you are tolerant to its stimulation.
If using caffeine to combat headaches (by reducing cerebral blood flow), cycling is not needed as the degree of blood pressure reduction does not differ between naive and tolerant users.
When Cycling is recommended
Usually, reactions mediated by adrenaline are those that it is recommended to cycle caffeine. The effects of adrenaline from caffeine are reduced during tolerance, but they do not fully disappear. This is due in part to a reduced secretion of adrenaline in response to caffeine, but also due to a reduced amount of adrenergic receptors in a state of caffeine tolerance.
Reactions that are mediated by adrenaline are increased focus, fat burning, and appetite suppression. 'Increased Focus' should not be confused with wakefullness, which is an adenosine receptor reaction and not attenuated with tolerance.
It should also be noted that the adverse effects of adrenaline, the increases in blood pressure and heart rate, will be preserved if one successfully cycles to keep caffeine's adrenergic effects pristine.
When Cycling is needed
Cycling is needed for anything pertaining to dopamine signalling in the striatum. When tolerance develops with prolonged caffeine usage, these effects quite literally disappear. It is known as an 'insurmountable' tolerance, in which rather than a dose-response curve shifting to the right it instead gets flattened.
The effects that are mediated via dopaminergic signalling are locomotion (have caffeine, start to run around in circles) and euphoria. Euphoria should not be confused with a mere 'greater well being', which can still happen in the absence of euphoria.