I think that the area where you would write the java arguments for the RAM allocation, is not being taken into effect. before the minecraft 1.8 update I use to use 6Gigs or RAM (max, -Xmx6G) after the update while not having changed anything, the game is no capped at the default 512MB. This affects 1.7.2 and 1.8 pre-release, I would assume it affects other versions but therse are the ones I tested. I tested with both modded and un-modded versions of minecraft. I tried un-installing Java and installing it again. I then un-installed minecraft and reinstalled it. non of these actions solved the issue. I really think that the issue is that the Java arguments into account. Below is the area of the launcher that I am talking about.