I've got squid-deb-proxy, avahi-tools, and squid-deb-proxy-client installed on a gateway VM running 12.04 Server, and squid-deb-proxy-client installed on two client VMs running Lubuntu and Xubuntu 12.04.
The service appears to be up and running according to htop, and I can see considerable activity when the clients update/upgrade, and I see activity in the log files... but I'm not seeing any cache being stored in /var/spool/squid3 - or anywhere else.
What should I be looking for to tell if its really working?
The logs on the server will show you if it's working, see here: