Cache / caching - is it working?

[eluser]Bullit2k[/eluser]
Hi All,
I was suffering with a mysql database that was having to handle too many queries.
To cut down the need to get data from the database so often,
I put $this->output->cache(420); //to cache full pages for 7hrs at a time.

This code is in my main controller right at the top.
system/cache is writeable and filling nicely with cached pages. Inspection of a b603b82kfsjlfkjel file shows it is indeed a cached page.

However, I'm not seeing the effects of this cache.
if I edit a page's content with my custom CMS I'd expect to have to clear this cache to see the change. However I see the change immediately.

Also the database still looks to be handling the same number of queries.
(I know the majority of these queries relate to page data.)

Any ideas what to do next? Or is cache on and it's not that good?
The fact I can see changes on dynamic pages straight away makes me think it's not looking at the cache.
Is there another piece to this puzzle?

Any advice welcome.
Thanks