Most certainly, memset will be much faster than that loop. Note how you treat one character at a time, but those functions are so optimized that set several bytes at a time, even using, when available, MMX and SSE instructions.
I think the paradigmatic example of these optimizations, that go unnoticed usually, is the GNU C library strlen function. One would think that it has at least O(n) performance, but it actually has O(n/4) or O(n/8) depending on the architecture (yes, I know, in big O() will be the same, but you actually get an eighth of the time). How? Tricky, but nicely: strlen.