Morning staff .. What is the maximum size of cache to hold the squid?
AFAIK there is no max. Only limited by the size of your disk(s).
The size of your cache is also limited by your max. RAM!
How much memory do I need in my Squid server?
As a rule of thumb on Squid uses approximately 10 MB of RAM per GB of the total of all cache_dirs (more on 64 bit servers such as Alpha), plus your cache_mem setting and about an additional 10-20MB. It is recommended to have at least twice this amount of physical RAM available on your Squid server. For a more detailed discussion on Squid's memory usage see the sections above.
The recommended extra RAM besides what is used by Squid is used by the operating system to improve disk I/O performance and by other applications or services running on the server. This will be true even of a server which runs Squid as the only tcp service, since there is a minimum level of memory needed for process management, logging, and other OS level routines.
If you have a low memory server, and a large disk, then you will not necessarily be able to use all the disk space, since as the cache fills the memory available will be insufficient, forcing Squid to swap out memory and affecting performance. A very large cache_dir total and insufficient physical RAM + Swap could cause Squid to stop functioning completely. The solution for larger caches is to get more physical RAM; allocating more to Squid via cache_mem will not help.