In most cases you do want an actual DNS server or it won't be able to reach sites and then cache the results.
There also seems to be problems with the default cache size it uses with 1MB. You may want to bump that up and or you'll find yourself restarting dnscache more often, depending on the role of this machine.
Personally we use it on some production machines where I work, it's crapware and I've been begging to just get rid of it, it seems to fail more often than it's worth as I've been pushing to create our own name caching DNS server instead of relying on outside DNS servers and TinyDNS.
The days I long for Bind like I had at my previous employers..