Overclocking
The Pandora's CPU can officially run at 600Mhz, but most Pandoras can also run at higher speeds. This will make CPU-intensive programs (such as an N64 emulator) run smoother. If you try a speed that's too high, your Pandora will freeze up. Simply turn off your system, then turn it back on, and you'll be good as new. If you still have problems, take out your battery for a minute before turning on your Pandora (this will discharge the backup capacitor that was designed to retain RTC while the battery is being changed [1])
CPU Speed
The OS comes with the ability to modify the CPU speed from the GUI. Under 'System' in the menu, you should find 'CPU-Speed'. This gives you a slider to set the speed between 14 MHz and 900 MHz. If you attempt to set anything over 600 MHz, you will be presented with a warning dialogue.
Note that the OMAP core will actually adjust its speed to match the load; you are setting the upper limit. On its own, reducing the clock speed has little impact on battery life.
Voltage Scaling
This is where it gets complicated. At low frequencies, the OMAP can still work with a reduced voltage, and that causes it to drain the battery a little slower. Alternatively, you can increase the voltage and maybe get a higher overclock. This WILL reduce the lifetime of your Pandora. At the moment, there is no GUI method of changing the operating voltage (which is specified as an 'opp' in the range 1-5, with 3 being the default).
If you reduce the CPU speed below specific thresholds, the voltage will automatically adjust downwards. In the proc/pandora filesystem, cpu_opp_max (default 3) is the upper limit. If you set this to 1 whilst still running at the default 500 MHz, your Pandora is very likely to crash. At 4, you may see almost as good an overclock performance as at 5. REMEMBER: OverVolting can halve the life of your Pandora.
A GUI tuning tool is likely to make tweaking this easier. Specifically setting preferred max stable overclock, warnings on overclock, and over-volt options.
App-specific Speed Control
It is possible to auto configure specific applications to increase the CPU speed whilst running. Applications can be configured to prompt with a suggested speed, and you are given the option to select a speed, making the choice persistent if desired. This is done by placing a 'cpuspeed' file in the /pandora/appdata/{pnd_name}/ directory. Delete the file to have the app ask again next time it is run. Some apps, such as PCSX-rearmed, also allows on-the-go overclocking thanks to the sdk.
CLI Examples
To set OPP5:
echo 5 > /proc/pandora/cpu_opp_max
To set your CPU speed to 800MHz:
echo 800 > /proc/pandora/cpu_mhz_max