Action Caching with memcached with config.cache_classes = true in development.rb/production.rb not working in Rails 2.1

When I put config.cache_classes = true in development.rb/
production.rb, index action is not cached in memcache stor, rather
local cache store is used. On putting config.cache_classes = false ,
action caching is working fine. In production we want
config.cache_classes = true, but then caching is not working.

Secondly, config.cache_store = :memcache in development.rb/
production.rb is also not working. I have to use
ActionController::Base.cache_store = :mem_cache_store, 'hostname:
11211' in application.rb to make it work.

I am using Rails 2.1. Any help would be highly appreciated.

Thanks
Ankit