I googled the web and increased the memory by following this post:
http://wordpress.org/support/topic/fatal-error-allowed-memory-size-of-33554432-bytes-exhausted-14?replies=33
Basically, I created a file, php.ini with the following line:
memory = 128M
and put it inside wp-admin directory.
It worked for a while but now the problem resurfaces again.
Any suggestions or is this some sort of a memory leak/bug?
Is there any official minimum-memory requirement now for NGG 2.0? I had seen the same out-of-memory errors.