Would it, though? Memcached is not magic pixie dust — applications have to be specifically written to support it. Most are not. We actually experimented with using memcached internally and concluded that adapting our code base to support it was not worthwhile.
Installing memcached on DreamHost VPS should be trivial, though. Just log in as an admin user and
sudo apt-get install memcached
The default size is 64 MB. I believe you can tune that in /etc/defaults/memcached.
Make sure to change the settings to not allow network access, though — otherwise, anybody on the Internet will be able to read and modify the contents of your cache. That would be BAD.