I have a design where I have some high speed ICs and need to put a capacitor on the input voltage line to stabilize the voltage and protect from spikes or dips. I am operating at 5v and between 300 and 500 mA. My research indicates that I need an electrolytic capacitor for this application but I have no idea how to select the appropriate capacitance value. Also, why couldn't I just use a regulator for this purpose? The datasheet for my IC indicates that I should use a capacitor but wouldn't a VR do a better job?
Mainly, because every chip can't be right next to the regulator. The further your chip is from the regulator that's supplying it, the more resistance and inductance there is in the connection from the regulator to the Vcc pin (and from the ground pin on the way back).
If the current draw of your chip changes, this resistance and inductance will result in a change in the voltage at the Vcc pin.
There's two ways to look at this.
A common set-up is a 0.1 uF ceramic capacitor at the Vcc pin of each chip, and a few large-valued electrolytics spread around the board (not necessarily one per chip). Whether this is appropriate for your design isn't clear from what you've shared.
Generally the high values (in bigger packages and often electrolytics) don't need to be as close to the chip as the small-value (small package) capacitors, because they are useful at lower frequencies where inductance separating them from the load (chip) has less effect. Maybe one 10 uF capacitor can be shared between 4 or more loads. And a few 47 or 100 uF capacitors can be sprinkled around the board.