All good feedback. However the one giant caveat is that most developers don't know how much memory their application needs.
Also there could be small hints next to the slider (yes, I'm a fan of sliders;)) as it snaps into the various positions...
But those are again just ideas. You should get a good designer on the case, this is their bread & butter.
Have a slider. When you move it have a window that lists what applications can be served with the selected allotment.
Hell... that'd be pretty damn cool looking