Preheat oven to 350 degrees F (175 degrees C). Grease and flour three 8 or 9 inch round cake pans. Stir together 3 cups flour, white sugar, and soda. Set aside.
Combine 1 1/2 cup butter and water in a medium saucepan. Bring to a boil over medium heat, stirring occasionally. Remove from heat, and add 4 ounces white chocolate. Stir until chocolate melts. Stir in buttermilk, eggs, and 1 1/2 teaspoons vanilla. Gradually stir in flour mixture; batter will be thin. Dredge pecans in 1/2 cup flour, and fold into batter. Pour into prepared pans.
Bake for 20 to 25 minute. Cool layers in pans for 10 minutes. Remove from pans, and cool completely on wire racks.
To make the frosting: Beat together both packages of cream cheese and 1/3 cup butter until creamy. Blend in melted and cooled white chocolate. Mix in confectioner's sugar and 1 1/2 teaspoons vanilla. Frost between layers, and on top and sides of cake. Sprinkle with additional pecans if desired.