It was actually Epic that said 512mb. The guys that created Infinity Blade. Not a big deal but figured it's something worth pointing out for people looking for more information.

Geekbench has been run on it as well, and its results were indicative of 512 MB.

Edit: actually I may be incorrect about the Geekbench part; nevertheless, 512 MB is reported from a teardown: http://www.anandtech.com/show/4964/ifixit-iphone-4s-teardown...