"Low Memory Warning" and "fails to create a virtual machine"

From ide.conf, I learnt:
If you are getting the 'Low Memory Warning' Message Dialog while running JDeveloper, please increase the -Xmx value below from the default 768M to something greater, like 1024M or 1250M. If after increasing the value, JDeveloper is no longer starting up because it fails to create a virtual machine, then please reduce the modified -Xmx value.
However,
If I set it to a bigger value, say 512M, it fails to create a virtual machine.
If I set it to a smaller value, say 400M, it throws Low Memory Warning after a short while.
So I do not know how to do. Total physical memory of my box is 4G. Free physical user memory after starting jdev is 1.5G.

512M isn't bigger, the default (according to your reading) is 768M...
I just tried with JDeveloper 11.1.2.2.0 (64-bit machine, but using 32-bit JVM) - works fine with 1024M - just to confirm that my changes are working, 5024M does give me "unable to create virtual machine"
Have you messed about with other settings?

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