Eclipse developers continue to rise to the challenge to pack more functionality into less memory with the upcoming 3.2M5 Eclipse SDK milestone. One of the biggest users of memory in the Java development toolkit has always been for the model of the Java program you're developing; after all it has to keep track of all the names, definitions, and so forth for all the types and members in the projects you're working on.
Before 3.2 M5, large JAR files would cause the Java model cache to overflow frequently. This caused poor performance because the same JAR files would have to be read over and over. Now, the JDT team reports,
"JAR files are now read more selectively, and thus interesting portions remain in the cache longer without consuming lots of memory. User editing experience is thus significantly improved on large workspaces containing big JARs. As a consequence, our experiments show that the memory requirement for developing Eclipse in Eclipse can be lowered to 128MB only (i.e. passing -Xmx128m to the VM) as opposed to 256MB as currently specified in the eclipse.ini file."
Contrary to popular belief, memory is not infinite or free. Users today might have more RAM than a year or two ago but they're typically also running more and larger programs simultaneously. Background virus and adware checking just adds to the strain on the VM system. So any reduction in memory usage is a welcome achievement.
BTW, you may want to see/cc/vote for bug 92250 which describes a problem that still seems to be there (as of M4 anyway).