Hmmm what do you consider "low memory" . I'm running XBMC on a 8200 IGP with 260 series drivers (260.24) and the largest amount of memory that is used is the shared ram for video that has 512 Meg allotted to it. Actual ram usage with vdpau is < 250 Megs for the entire system running on opensuse 11.3 x86-64.
I know there was a vdpau mem leak in the earlier 260 series but that has since been resolved.

