> I run out of space using Squeak on a 256M  linux (slackware 9.0)
> system when Squeak reaches about 50M of image size.
>
> Is there a way to increase this amount of memory?
Yes.
First, make sure you're using the latest VM version (3.6g-2 or a
version from the CVS). You can get a copy of mine from
http://bike-nomad.com/squeak/linux-squeak-vm-3.6g-2.zip
Second, don't tell Squeak how much memory to use.
That is, remove any -memory flags from your command line.
Here is a summary of the appropriate flags from the man page:
      -memory size[mk]
requests that a fixed heap of size bytes be allocated for the Squeak
image. If the suffix `k' is given then the argument is expressed in
kilobytes. If the suffux `m' is given then the argument is expressed
in megabytes. This option SHOULD NOT be used, unless there is a good
reason to do so, since it places an arbitrary limit on Squeak's object
memory size.
       -mmap size[mk]
requests that a variable heap of at most size bytes be allocated. (The
suffixes are as described for the '-memory' option.) squeak will
initially allocate a heap that is large enough to hold the image, with
a small amount of headroom. If at any time Squeak requires more memory
for its image then additional space will be allocated dynamically.
Likewise, when memory is no longer needed it will deallocated and
returned to the system. The size argument places an upper limit on how
big the heap can grow in this fashion. squeak uses a dynamic heap by
default with the maximum size set to 75% of the available virtual
memory or 1 gigabyte, whichever is smaller.