couple things...
1. the poll allows an individual voter to select multiple items when they vote
2. on my 2GB mini, i'm able to allocate up to 1500MB to an individual VM
3. likewise i'm able to allocate a maximum of 1612MB in the parallels global preference for "reserved memory limit"
even maxing out an XP/SP2 VM at 1500MB i saw no fall off in the memory or cpu benchmarks under passmark. this confirms what i saw at lower allocation numbers of 512,768, and 1024
in short, at 1500MB allocated to the VM, i had allocated 75% of the global physical RAM resources to a single GUEST VM and left only 25% of the global physical RAM to the HOST OS itself and whatever apps where running on the HOST
i'm sure that if you start loading up applications in the HOST portion and parallels must compete with these other OSX apps for resources you will see degradation.
in my own run, firing up itunes in the HOST and leaving the GUEST running worked fine for awhile, but after launching a few safari windows and browsing around i was able to get OSX locked up into a power down error where the sound was looping and the power cycle message was on the screen....not something i had ever seen before in the last several months of use with lower allocations of resources to the VM...forcing applications into a resource "corner" is asking for these type of failures.
IMO, all of this is common sense. there is a finite amount of resources in a system for the HOST OS, HOST OS applications (like parallels), and the GUEST OS's themselves. you need to be reasonable in how you allocate these things. for example if you are using heavy, memory consumptive apps already in OS X HOST, you will not have many resources to allocate to parallels and its VM....or alternatively if you run nothing in OS X HOST but parallels, you could probably have no issues allocating up to the limit (as i saw at 1500MB allocation with no other apps running)
virtualization isnt some magic solution that gives you something for nothing. at the end of the day you still have only so many resources and you need to be intelligent about how you allocate them.
best of luck
boogie