Well, last week I got a new Macbook Air with Lion preinstalled and so I am setting up a new system from scratch. This time I only have Indigo installed and lo and behold I am still seeing the same problem. Realizing that there must be a simple explanation, I now looked closer and see that there is a simple explanation. For some reason, on Indigo when it Eclipse creates your default configuration it is not including the PermGen settings by default. So I was just crashing due to not enough PermGen space errors. Pretty obvious, it has just been a long time since I had seen these problems.
Adding "-XX:MaxPermSize=256m" to the -vm arguments in my Runtime Configuration has everything working great again.
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