One of PlayStation 3's original memory weaknesses was its large Operating System memory footprint, but it's been slashed. The console originally had an OS footprint of around 120MB's spread accross both the XDR and DDR Ram, which was soon reduced to 96MB (64MB on XDR and 32MB on DDR).Compared to the Xbox 360's total 32MBs used for its OS, the PS3's was incredibly bloated.
The PS3 is now only using 50MBs for its OS, despite the addition of many new features, such as the in-game XMB. 7MBs of local memory is used, alongside 43MBs main memory.
What used the memory? Unlike Microsoft, who knew what features they were going to use their memory for, Sony was still in the development stages when they launched the PS3. Therefore, they reserved a big bunch of memory for future features development – once they locked these down they were able to continuously give memory back to developers, while also refining each new feature’s memory usage.
Sony may have also cut down memory usage by making a number of features optional, such as in-game music, which they may have removed from the default OS memory footprint.
Source: PlayStation University