pgBouncer for connection pooling

Hi,

I have a web-based application (drupal) which uses PHP to make connections to a back-end postgresql 8.3 server. The application and database are on separate servers, but as we can get 20+ concurrent connections on the database I've looked at pgBouncer to try and reduce the overhead of new connections on the database. I currently have pgBouncer running on the same server as my postgres database but I was wondering whether this is a recommended setup - are the performance benefits of using a connection pooler overshadowed by the overhead of running pgBouncer on the same server as the database?

How are other people using pgBouncer? E.g. on a separate server from the database etc...?

Thanks in advance.