I run CS3 on Windows XP with 3GB ram. I find that after working on 3 or 4 photos using multiple layers, I start having "out-of-memory" errors and I have to kill CS3 and start it again.
My dng files are typically around 30MB and once loaded in photoshop, they are 110 - 120MB. It's not unusual to see the "info" window showing 300 - 500MB for the composite of the layers. In the photoshop preferences, I have played with the ram allocation setting all the way to 1.5GB but nothing helps. The memory utilization as displayed in the Windows Task Manager shows it approaching the limit then bang! ....that's as far as I can go. Purging history or closing other image files does nothing to reduce it.
One final thing: I have plenty of hard disk space and I let Windows handle the virtual memory requirements.
Is anyone else experiencing this?