Hello, I'm Kronix from the SparkZ SMP team.
Myself owning the SMP server(s), I have also encountered problems like this in the past. The problem with your server is not ram, java or any of that; it's a save issue. The world started on 1.5 and is now 1.8? This would be a whole new LEVEL of corruption. The world is contradicting itself because of the fact that 1.8 code is interfering with the old 1.5 world. If this was happening beofore the update then there is another explanation: from playing at least 50 different modpacks I can tell you, some worlds just spawn insane amounts of mobs. One way of getting rid of this is getting plugins, or mods to deal with the problem. If you can install bukkit, this might help turn down mob spawning
http://dev.bukkit.org/bukkit-plugins/entitymanager/.
*EDIT* If you need any further help, let me know. I'll get back to you!
