Well, this is highly dependant on your server. If you are on a shared host, you will likely be limited to either file or database storage. Becareful, because on a moderately sized site, the cache can grow in excess of 20 megs (some hosts have limits on database size).

If you are on a VPS or a dedicated server, any of the memory caches will work fine. If you are on a database cluster, then I would suggest going with Memcache (because the cache will be shared among all servers). For help deciding between APC, Eaccelerator and XCache, google each and decide which one suits your needs better.

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