Ignore what Dreamhost Support tells you. PHP 5.2 fastcgi is the problem, not the solution.
Go to all of your wordpress domains and change the default PHP from
PHP 5.2 Fastcgi
PHP 5.3 cgi
Setup W3 Total Cache
Here is my site before and after the switch to PHP 5.3 cgi. The drop in memory usage is HUGE! I have cut my max from 600mb to 300mb and I am experiencing no problems with my VPS getting killed.
(why isn’t the image displaying?)