I’ve had the same problem setting the RAM cache, no matter what I do only 2MB is used. One thing I have found is that by using a very fast slave drive for cache it has speeded it up quite a bit.
Your best option if you need to have maximum configuration would be to build a didicated squid proxy
He says that you need more RAM for bigger cache. Every one Gigabyte of cache needs 15MB of RAM. You have ~350MB of RAM, divided by 15 you get ~ 23GB of cache size …