Cloaking is basically providing different content to a search engine then to actual visitors and is implemented through IP delivery. For cloaking, you need to store  the IP addresses of the various robots that hit your site. Then check if the current IP is a robot, and accordingly changes the presentation or logic.

 
Evil Effect Of Cloaking:
Although to certain extent cloaking are becoming accepted, but still there is a risk, and if  caught by Google for doing cloaking that it deems as unethical, your site may be banned.
Caching feature provided by most major search engines would display the cloaked version to actual visitors, instead of the real one.
 
So, if you do not own a very popular site whose ban would elicit a public response, and not willing to take a risk, cloaking should be avoided.