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How does memcached work? (details inside)

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As I understand memcached should cache stuff to virtual/physical memory. I've a Wordpress installation with W3TC installed, and my server is capable of using either Disk or Memcached, so I went for Memcached.

When I check the memory usage in cPanel, it's on 0 (physical's on ~100Mb). When I try to load the site, memory usage jumps to 100-300Mb (different values for both types of memory, but they are both at ~300Mb). CPU usage jumps to 100%. It stays like that for a few minutes.

So how does memcached work then? It doesn't make sense to me. Would I be better off using Disk cache instead? The site's utterly slow too, unless I'm reloading it or revisiting pages I've already visited - then it's lightning-fast. Disk cache however, seems slow-ish too in general...

What am I supposed to do? Is there a way of "fixing" this, if there is something to fix in the first place of course?

Any info or insight is appreciated,

Thanks!

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