The memory consumption -would- be "that much" is the problem. Users on our VPS systems have discovered you actually need the highest level Dedicated series because in order for it to remain stable it needs a minimum of 1gb permanently allocated to it. I run one off my home PC for 3 users - it allocates 1gb to itself, and when all 3 of us are online, ram idles around 750mb of that 1gb in use - that fluxuates a lot depending where we are in the world mind you, but it does require lots of ram to keep stable. The larger MC servers I've seen running often run 64bit java and allocate several gb to the server so it can handle more than a few users.
And no, we cannot run that on Free Hosting, or Premium Hosting. It'd have to be on a VPS or a true dedicated server due to the massive ram requirements - depending which server you're running as well, CPU could very well be through the roof.
