Apologies in advance if this is a bit detailed
I'm really interested in the whole ISIS thing so this may go on a bit.
The reason why we want to kill the caliph (head of the caliphate, at the moment this is a guy called Baghdadi) is because ISIS is a fanatical, fundamentalist Islamic group. In spite of a lot of people - including a great many politicians - declaring them not to be 'real muslims',
in reality ISIS are the most true muslims of them all, according to the Qu'ran. They quite literally follow the will of Muhammad and follow in his footsteps. Every one of their laws, every one of their actions, is a direct result of their following the Qu'ran. They desire to kill all non-Sunni Muslims because it says to do so in Islamic scripture. They follow a doctrine called Takfiri, which literally earmarks for death anyone who does not follow Islam literally. They seek to aggressively expand their boundaries, because this is also Muhammad's will; he declared that the caliphate must accept no borders with non-believers. The point being, literally everything that ISIS do is built upon and found in Islamic scripture.
Now the reason why the caliphate is such a powerful propaganda tool is because in Islamic scripture, it says that one day a strong caliphate will emerge. It will expand its territories, until an anti-hero is born who will destroy this caliphate to within a few thousand Muslims, before Jesus will return and defeat this anti-hero and usher in the apocalypse, which is meant to be some glorious occurrence in the eyes of the Islamic faith. Now supposedly, the caliph who will see this through will be the 12th Islamic caliph, and Baghdadi is the 8th. So if we were to kill the next four caliphs, it would be a death knell to the caliphate. The whole structure of ISIS is built upon the holy word of Allah, it's whole existence and function is built on His word. If the 12th caliph were to pass without this apocalyptic event, it would destroy ISIS' whole claim to be the great Islamic caliphate to usher in the end.
That's obviously a gross oversimplification, but it shows why there is value in targeting the caliph.