A study at the Columbia University Medical Center suggests that there is a link between blood sugar control and memory decline. Apparently, spikes in blood sugar can affect the parts of the brain responsible for the formation of memories.
Good control should therefore lead to better brain function. I think all who deal with this disease have witnessed this fact first hand. The New York Times reports that this is a phenomena that encompasses not only the type 1 and type 2 diabetes community; it affects all of us. As we age, the ability to regulate blood sugars effectively degrades and may cause this loss of memory function. You can read the NYT article here.