I think this might help you.
I was working in GWT project before and I had similar issue. 
Try the following

1. Windows -> Preferences
2. Java -> Installed JREs
3. Select the JRE and click on Edit
4. Add the follwing in VM arguments -Xmx1024M
Please ensure that you have minimum RAM of 2 GB to use 1024MB for your JVM. 

The following link will give better idea with screen shots

http://dinu.blog.com/2010/06/02/out-of-memory/
http://dinu.blog.com/2010/06/02/out-of-memory/ 

Regards,
Dinesh kumar
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