I see two instances of this running in Task Manager (Windows 2000 Pro), taking up a total of 9,612 KB of RAM. That doesn't seem like a ton of RAM to me (384 MB here). How much RAM does your machine have?
WOHOOOO. I figured it out. Turns out that when I installed my Virus and Firewall protection, I also installed an Internet Security program. This would apparently then cause the SVCHOST for the Local System to grab any free RAM it could (within 1 hour it had grabbed 170 megs). I mearly uninstalled it and the problem is fixed.