This is a VERY short process.  Doing this, you will lower the chance of your server running out of memory and crashing.  Here's what you do:

FIrst, you run your Bukkit server for the first time, and after it starts up, stop it.

Now, you need to right-click your "run.bat" (or your startup file) and click "Edit".  YOu should see some text like this:

[b]java -Xmx1024M -jar craftbukkit.jar -o true[/b]
[b]PAUSE[/b]
Let's say you wanted to allocate 4GB to your server.  Replace the -Xmx1024M with -Xmx4096M or -Xmx4G


Then save the batch file and run it!