If a program typically uses just a few meg of memory, don't bother making any effort to reduce memory usage. For example, if it is impractical for other reasons to operate on files more than a few meg long, it is reasonable to read entire input files into core to operate on them.
However, for programs such as cat or tail, that can
usefully operate on very large files, it is important to avoid using a
technique that would artificially limit the size of files it can handle.
If a program works by lines and could be applied to arbitrary
user-supplied input files, it should keep only a line in memory, because
this is not very hard and users will want to be able to operate on input
files that are bigger than will fit in core all at once.
If your program creates complicated data structures, just make them in
core and give a fatal error if malloc returns zero.