Varnish is a state-of-the-art, high-performance HTTP accelerator (reverse proxy). Varnish is designed by a BSD kernel developer to make full use of BSD / Linux kernel's ability to manage memory. It is extremely fast, up to 10 - 20 times faster than squid.
memcached is a high-performance, distributed memory object caching system, generic in nature, but intended for use in speeding up dynamic web applications by alleviating database load.
Yahoo!'s Exceptional Performance team evangelizes best practices for improving web performance.