Edit : this is an old post, and recent changes in the Raspberry Pi design (more RAM in Revision 2) and improvements in how Pd runs in Raspbian make it obsolete. Please read newer posts in the Raspberry Pi category.
By default the CPU is allocated 192 Mb of RAM, and the remaining 64 is allocated to the GPU (the chip that does all the graphical work). If you plan on using Pd on a headless Raspberry Pi (see my previous post on this topic), you won’t need no display, hence no graphics, and you can allocate more RAM to do the audio job.
To do this, enter your login and password at start up when the command prompt shows up (“pi” and “raspberry” if you haven’t changed them yet), and type :
sudo raspi-config (more info on this command here)
This will open a graphical user interface to help you configure your machine. Use the arrow keys to scroll down to “memory split”, and hit enter. Then select the line that gives 224 MB to the CPU (it should be the first), and use the left or right arrow key to highlight the “OK” button. Hit enter. You need to reboot in order for the changes to apply (you can just unplug and replug your Raspberry Pi).