Several experiments indicate that there exists substantial synaptic-depression at the synapses between olfactory receptor neurons (ORNs) and neurons within the drosophila antenna lobe (AL). This synaptic-depression may be partly caused by vesicle-depletion, and partly caused by presynaptic-inhibition due to the activity of inhibitory local neurons within the AL. While it has been proposed that this synaptic-depression contributes to the nonlinear relationship between ORN and projection neuron (PN) firing-rates, the precise functional role of synaptic-depression at the ORN synapses is not yet fully understood. In this paper we propose two hypotheses linking the information-coding properties of the fly AL with the network mechanisms responsible for ORN-->AL synaptic-depression. Our first hypothesis is related to variance coding of ORN firing-rate information--once stimulation to the ORNs is sufficiently high to saturate glomerular responses, further stimulation of the ORNs increases the regularity of PN spiking activity while maintaining PN firing-rates. The second hypothesis proposes a tradeoff between spike-time reliability and coding-capacity governed by the relative contribution of vesicle-depletion and presynaptic-inhibition to ORN-->AL synaptic-depression. Synaptic-depression caused primarily by vesicle-depletion will give rise to a very reliable system, whereas an equivalent amount of synaptic-depression caused primarily by presynaptic-inhibition will give rise to a less reliable system that is more sensitive to small shifts in odor stimulation. These two hypotheses are substantiated by several small analyzable toy models of the fly AL, as well as a more physiologically realistic large-scale computational model of the fly AL involving 5 glomerular channels.