The squid3 deb that's available in the apt repos don't come configured with ecap support, which is required to support serving of gzip-compressed pages to clients.

In a network environment where the majority of traffic is wireless (like where I live), reducing the payload of internal network requests will have a positive impact on performance.

Follow instructions precisely at http://code.google.com/p/squid-ecap-gzip/wiki/Installation.

You should use Squid 3.1.11 and ecap 0.03 even though more recent versions are available. I tried compiling with 3.1.12.2 and ran into a bunch of make errors, where 3.1.11 compiled just fine.

The one step where I deviated from the instructions, was when configuring Squid. I used, instead, configure options which were closer to the original Ubuntu release. Here it is:

./configure '–build=i686-linux-gnu' '–prefix=/usr' '–includedir=${prefix}/include' '–mandir=${prefix}/share/man' '–infodir=${prefix}/share/info' '–sysconfdir=/etc' '–localstatedir=/var' '–libexecdir=${prefix}/lib/squid3' '–disable-maintainer-mode' '–disable-dependency-tracking' '–disable-silent-rules' '–srcdir=.' '–datadir=/usr/share/squid3' '–sysconfdir=/etc/squid3' '–mandir=/usr/share/man'  '–enable-inline' '–enable-async-io=8' '–enable-storeio=ufs,aufs,diskd' '–enable-removal-policies=lru,heap' '–enable-delay-pools' '–enable-cache-digests' '–enable-underscores' '–enable-icap-client' '–enable-follow-x-forwarded-for'  '–enable-arp-acl' '–enable-esi' '–disable-translation' '–with-logdir=/var/log/squid3' '–with-pidfile=/var/run/squid3.pid' '–with-filedescriptors=65536' '–with-large-files' '–with-default-user=proxy' '–enable-linux-netfilter' –enable-ecap
 

The last switch adds support for ecap.