why are separate icache and dcache needed
As processor's MEM and FETCH stages can access L1 cache(assume combined) simultaneously, there can be conflict as which one to give priority(can become performance bottleneck). One way to resolve this is to make L1 cache with two read ports. But increasing the number of ports increases the cache area quadratically and hence increased power consumption.
Also, if L1 cache is the combined one then there are chances that some data blocks might replace blocks containing instructions which were important and about to get accessed. These evictions and followed cache miss can hurt the overall performance.
Also, most of the time processor fetches instructions sequentially(few exceptions like taken targets, jumps etc) which gives instruction cache more spatial locality and hence good hit rate. Also, as mentioned in other answers, there are hardly any writes to the ICache(self-modifying code such as JIT compilers). So separate icache and dcache designs can be optimized considering their access patterns and other components like Load/store queues, write buffers etc.
It has to do with which functional units of the CPU primarily access that cache. Since the ALU and FPU access the data cache which the decoder and scheduler access the instruction cache, and often pipelining allows the instruction processor and the execution unit to work simultaneously, using a single cache would cause contention between these two components. By separating them we lose some flexibility and gain the ability for these two major components of the processor to fetch data from cache simultaneously.
The main reason is: performance. Another reason is power consumption.
Separate dCache and iCache makes it possible to fetch instructions and data in parallel.
Instructions and data have different access patterns.
Writes to iCache are rare. CPU designers are optimizing the iCache and the CPU architecture based on the assumption that code changes are rare. For example, the AMD Software Optimization Guide for 10h and 12h Processors states that:
Predecoding begins as the L1 instruction cache is filled. Predecode information is generated and stored alongside the instruction cache.
Intel Nehalem CPU features a loopback buffer, and in addition to this the Sandy Bridge CPU features a µop cache The microarchitecture of Intel, AMD and VIA CPUs. Note that these are features related to code, and have no direct counterpart in relation to data. They benefit performance, and since Intel "prohibits" CPU designers to introduce features which result in excessive increase of power consumption they presumably also benefit total power consumption.
Most CPUs feature a data forwarding network (store to load forwarding). There is no "store to load forwarding" in relation to code, simply because code is being modified much less frequently than data.
Code exhibits different patterns than data.
That said, most CPUs nowadays have unified L2 cache which holds both code and data. The reason for this is that having separate L2I and L2D caches would pointlessly consume the transistor budget while failing to deliver any measurable performance gains.
(Surely, the reason for having separate iCache and dCache isn't reduced complexity because if the reason was reduced complexity than there wouldn't be any pipelining in any of the current CPU designs. A CPU with pipelining is more complex than a CPU without pipelining. We want the increased complexity. The fact is: the next CPU design is (usually) more complex than the previous design.)
One reason is reduced complexity - you can implement a shared cache that can retrieve multiple lines at once, or just asynchronously (see Hit-Under-Miss), but it makes the cache controller far more complicated.
Another reason is execution stability - if you have a known amount of icache and dcache, caching of data cannot starve the cache system of instructions, which may occur in a simplistic shared cache.
And as Dan stated, having them separated makes pipelining easier, without adding to the controller complexity.