Johan Leher has contributed a fascinating article to Nature News (PDF here) that discusses the 30 or more strains of mice that have been genetically altered to have enhanced memory and problem solving capabilities, and more generally addresses the issue of cognitive enhancement in humans. Many of the mouse mutants have enhanced long term potentiation (LTP) at synapses (a few nerve transmissions between nerve cells enhance further transmissions). LTP is a fundamental feature of learning and memory, and it appears that by increasing its plasticity it is possible to increase cognitive capacity.
The downside of enhancing memory, at least in some unusual humans who have extraordinary memory abilities, is that they appear to be locked in details, unable to understand metaphors or generalize. Martha Farah notes that some human experiments with amphetamines show a trade-off between enhanced attention and performance on creative tasks. "The brain may have made a compromise in that having a more accurate memory interferes with the ability to generalize...You may need a little noise in order to be able to think abstractly, to get beyond the concrete and literal." A further issue is non-cognitive side effects, which have been demonstrated in mice, such as enhanced sensitivity to pain.