First of all, what is pace?
Wordnet.princeton tells us that pace is the "rate of moving". The Glossary of Technical Terms for Comparative Reading suggests that pace is "the 'speed' at which a text moves; for example, an adventure story may be 'fast-moving' with lots of incident and dialogue, while a romantic novel may be 'slower', containing less action and more description".
I don't know about you, but I don't think that 'rate of moving' is terribly useful in terms of writing. And the glossary's definition, though more concretely related to writing, doesn't really help much either - basically, it can point at something and say whether it has pace or not, but it still doesn't tell us what it really is.
Here's a definition that strikes me as a whole lot more useful: 'Relative speed of progress or change.' Conflict, as we know, is change. Pace is the speed of conflict - the rate of change. In some books (romance, some chick lit, literary, possibly high fantasy) the rate of change is slower, and the overall tone of the book as a result is quieter. In other books - action, urban or contemporary fantasy, etc - changes happen quickly and the book feels faster, louder.
Both styles can be compelling, but often the difference is in what makes them compelling. Pacey books often compel the reader to keep reading by the sheer speed of events - things just keep happening and there's no 'convenient' place to stop and put the book down. Slower books still have a progression of events and conflict (else they would be neither interesting nor a narrative!), but they tend to rely more on characterisation and the like for their compulsion.
And just as both styles can be compelling, both can suffer from myriad problems. Too fast, and you risk losing your reader to confusion, tiring them out, and potentially skimping on things like characterisation and logic. Too slow and you also risk losing your reader, but this time to boredom.
For me, personally, the bigger problem is slowness. Well, it's currently the bigger problem :D Last year, when I started my first serious attempt at a novel, I ended up moving the story too fast and skimming over a lot of important world building and characterisation. As a result, readers were confused about the rules under which the world operated, and didn't really connect with the MC - because they weren't given a chance.
My second attempt suffered too far the other way. I'm talking here about Logan, and you can dig up the post in my archives where I decided that the first ten chapters - about 15,000 words - were backstory. Nothing happened.
Although this is a bit of a misnomer. Of course things happened; if they didn't, I'd have had nothing to write about, would I? The problem was, the things that were happening weren't imperative to the story. Sure, it was important that those things happened, and if they didn't there would BE no story... But I didn't need to tell the readers about them. It's like the 5-year-old's version of a story, where they repeat everything in all it's boring detail, as opposed to the adult's version, where they hit the high points and know that you'll fill in the other stuff yourself.
Of course, that's the trick. What stuff can you leave to the reader to fill in, and what can't you? This is the big, massive, gargantuan issue of Significance, something that I'm still coming to grips with in practice though I know the theory - and something I'll elaborate on next time ;)
PS. Because I love it so much, because the timing was perfect when I read it and things clicked in my head, and because it's just such a great example of a perfectly paced pacey book, I highly recommend Lisa Shearin's Magic Lost, Trouble Found as the book that taught me about how to do pace right. Of course, whether or not I've learnt my lesson well is another matter! :D