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With larger caps it's often easier to connect them between the pots and it saves having to use a link wire. Smaller caps are usually easier to work with on the pot itself at the cost of having to use a wire link. Use whichever style best suits you and your particular build.
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The white and black sheaths are just cotton (or something like that) - you can get shielded which does have a metal sheath, (http://www.pitbullguitars.com/shop/u...-shield-500mm/) - I think you'll find that's what they have used for the kit electronics you've shown.
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