The reason that Virtual Private Servers (VPS) charge so much for RAM is two fold. One is explained in Kyle's post - the sheer cost of ECC parity RAM, but the other is provisioning. When you buy a VPS you are buying a 'slice' of RAM, CPU, and hard drive space. If the provider has these resources divided in to 10 slots, then doubling your RAM requirement effectively reduces the amount of slots they can sell out of that server to 9, so to keep the ROI up, they charge people more money for more resources. Often, the tiers are designed to force customers to use the least amount of resources or upgrade to a dedicated server.
I recommend RapidXen (I use), Wiredtree (I use), or SliceHost (comes highly recommended to me) for VPS, unless you're not familiar with the command line. Honestly, if you need more than 1GB or RAM, you need a dedicated server. You could always get a hybrid from WiredTree, they are pretty good.
I have purchased 16GB of DDR2 ECC RAM for about $300 for my HP servers, which isn't too expensive. DDR3 is a little more.