This was caused by my HDD being completely full up.
In /var/log/messages/ it reports there is no space left on device.
Jan  6 20:54:06 sme-backup squid[25843]: Process ID 25843 
Jan  6 20:54:06 sme-backup squid[25843]: With 1024 file descriptors available 
Jan  6 20:54:06 sme-backup squid[25843]: DNS Socket created at 0.0.0.0, port 32897, FD 5 
Jan  6 20:54:06 sme-backup squid[25843]: Adding nameserver 192.168.2.3 from /etc/resolv.conf 
Jan  6 20:54:06 sme-backup squid[25843]: User-Agent logging is disabled. 
Jan  6 20:54:06 sme-backup squid[25843]: Referer logging is disabled. 
Jan  6 20:54:06 sme-backup squid[25843]: Unlinkd pipe opened on FD 10 
Jan  6 20:54:06 sme-backup squid[25843]: Swap maxSize 102400 KB, estimated 34133 objects 
Jan  6 20:54:06 sme-backup squid[25843]: Target number of buckets: 1706 
Jan  6 20:54:06 sme-backup squid[25843]: Using 8192 Store buckets 
Jan  6 20:54:06 sme-backup squid[25843]: Max Mem  size: 8192 KB 
Jan  6 20:54:06 sme-backup squid[25843]: Max Swap size: 102400 KB 
Jan  6 20:54:06 sme-backup squid[25843]: diskHandleWrite: FD 9: disk write error: (28) No space left on device 
Jan  6 20:54:06 sme-backup squid[25843]: Write failure -- check your disk space and cache.log
Jan  6 20:54:07 sme-backup squid[25845]: Starting Squid Cache version 2.5.STABLE14 for 
Deleted some stuff and now the problem is solved.
Thanks
Rob