Assuming a MySQL datastore, when would you NOT want to use memcached in a Ruby on Rails app?
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Memcache is a strong distributed cache, but isn’t any faster than local caching for some content. Caching should allow you to avoid bottlenecks, which is usually database requests and network requests. If you can cache your full page locally as HTML because it doesn’t change very often (isn’t very dynamic), then your web server can serve this up much faster than querying memcache. This is especially true if your memcache server, like most memcached servers, are on seperate machines.
Flip side of this is that I will sometimes use memcache locally instead of other caching options because I know someday I will need to move it off to its own server.