As with most things in life, here
[Read more of the backstory at macosxhints]
And in fact, there is a problem with Parallels Desktop 1.0. It uses Mac OS X's default caching strategies for huge files such as the operating system images (hard disk files) and SAV files (session saves). Over time, almost all of your RAM will fill up with data from these files, leaving little room for your other applications.
I contacted the Parallels team last week to let them know about the problem, but haven't heard back from them at all. Perhaps they're all on vacation. Frustrated and needing a short-term fix to preserve my own sanity, I wrote PD Tweaker.
Let us know how you fare.