QUOTE (VL Commy)
i believe the phase plug stops the rear wave of the speaker from interfering with the front wave.
A dustcap stops the rear wave from interfering with the front wave. (and also to stop dust from getting in the gap) In the cases where the phase plug is attached to the cone (it isn't always attached onto the cone, like those jaycar splits for example), then it would of course be a dust cap.
Now due to the short wave lengths of upper midrange frequencies, the shape of the cone and dustcap is very important in determining the upper midrange frequency response. In the case of car audio, phase plugs are usually used to give extended OFF AXIS response. Phase plugs are not really any more expensive than decent dustcaps, so when a manufacturer is designing a mid for serious off axis use (60-90 degrees), a phase plug may be a good design compromise.
The downside is, some mids with phase plugs can be quite peaky on axis.
I prefer to visualize it as on and off axis frequency response curves, rather than simply calling it distortion as per the article that atmo posted.