better late than never: PermGen space is not Heap space.
What you see with the -Xmx ans -Xms setting is heap space, not permgen space.
It's a well established problem with Eclipse 3.2 as well, it also tends to run out (especially during large scale XML operations like editing lots of deployment descriptors or wsdl files).
You can increase it with: -XX:MaxPermSize=256m
At least with Sun JVMs (other makes may not have this flag).
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