Does web browser uses previously saved cache in private browsing?

Randolph you are incorrect. I just tested firefox 10. It uses in-memory cache of pages and websites. It does not use the on-disk cache.

Good point about the addons :)

No and no. That's the entire point of private browsing.

Wade was right and I was wrong. According to research, browsers tend to leak information, especially through add-ins.

The researchers found that the browsers' protections were imperfect. Browsers did not properly isolate their private sessions from non-private ones, with the result that suitably crafted sites could trace visitors between private and non-private sessions. Sites could also leave persistent indications that they had been visited, allowing visits to be detected by local users.

As Wade also pointed out, Firefox will reuse non-private in-memory cache for sites that are then visited in privacy mode.

Chrome incognito windows also use cached static assets from previous non-incognito browsing sessions, without restraint. (A quick look at the Network tab in Dev tools demonstrates this). In my quick check, it also appeared that clearing the cache had no effect on any open incognito windows--they still used the cached assets! In sum, Incognito isn't currently a useful tool for loading pages "from scratch".