I had just upgraded my server to 8GB of RAM and noticed whenever I tried to increase the amount of memory that java used in McMyAdmin.conf I was getting the "Could not create the java virtual machine" error.
After researching a little on the forums I discovered that for some reason the normal download page for JRE will not give you the download link for 64-bit Java on Windows, which is where my mistake was.
To find it, go to http://www.oracle.com/technetwork/java/javase/downloads/index.html and click on Java SE 7xX (whatever the latest version is) and choose the JRE (or JDK if you need the compiler). Windows 64-bit version is hiding at the bottom.
Normally if you just go to the Java website to download the JRE, it will automatically direct you to the Java 6 x86 downloads. After I installed 64-bit Java I was able to allocate more RAM to the server.
Just thought I would post this to save anyone else some possible trouble. Not sure why Oracle decided to do that on their website, but it had me tearing out my hair for about an hour. Might be a good piece of information to put in the FAQ.