I'm not sure how Linode does it, but I've worked on dedicated machines that have separate, internal routes. (Slicehost VPSes have this option available -- unme

I'm not sure how Linode does it, but I've worked on dedicated machines that have separate, internal routes. (Slicehost VPSes have this option available -- unmetered -- too.) When compared to heavy processing on large database queries, memcached -- even with a few extra ms of latency -- can still be a major performance win. Although this largely depends on the applications you're making. I've been working with GIS applications lately, where a large distributed cache (most memcached clients automatically support sharding) is about the best you can do without a large hardware budget.