APC+mysql cache (not just query but keycache too) is a must, but memcached is pointless unless you have a multi-server website (on a single server APC shared memory is way faster than memcached).

All logged out users should be served a completely cached static page that bypasses PHP entirely, it's way faster than even an opcode cache and way less load.

WP-Super-Cache can serve static pages to logged out users and makes this rather easy to setup. It's practically a must for wordpress.

I've did some experiments - and yes APC is a little bit faster (1-5ms per page rendering) when used as key-value store in comparision to memcached via unix socket. However I had always problems with cache fragmentation and a resulting slowdown. If you use Apache mod_fcgid the PHP processes are beeing shot down and started at random and APC is is not shared acress them. With nginx and PHP-FPM is is not so true anymore. I've had the impression memcached is more solid.

For static caching I use nginx with fastcgi_cache. This makes WP-Supercache obsolete. I bybass the cache for requests containing certain cookies, so that logged in users always receive fresh pages.

Another big Wordpress performance sink is locales. If you have a blog in a non-english language consider using a language-caching plugin. Wordpress uses a PHP gettext implementation that is quite slow. 20% speedup if you cache the generated locales.

But it's a shame to spend days or months on tuning Wordpress, what is essentially just a blog engine.

I don't know how the caching plugin in WP works, however the most difficult part of caching is always cache invalidation, which is the reason why Memcache is better than an in-memory cache, even for a single server, because then you have the flexibility of invalidating cache entries from a background process that does not run on that server.

It's also great to have the flexibility of adding more servers in case of a huge spike, even if you are running on only one server. Like on Heroku, where you can just increase the number of dynos in realtime. Doing that without a central cache that every server can access can break your MySQL because each new server will have a cold cache.

If you want a smart cache invalidation system for NGINX please have a look at this plugin http://bit.ly/nginxmanager

Pages are cached on NGINX for not logged in user, and when a new content is published all and only the pages that contains that content are deleted from the cached and regenerated at the next request.