1.7.2 update crashes my network after a few minutes, can't play

Cannot network on my server..(with or without Hamachi)..Crash report:

Minecraft Crash Report ----
// You should try our sister game, Minceraft!

Time: 11/11/13 7:33 PM
Description: Exception in server tick loop

java.lang.OutOfMemoryError: Java heap space
at aoh.<init>(SourceFile:9)
at aol.<init>(SourceFile:25)
at aow.a(SourceFile:266)
at aow.a(SourceFile:78)
at aow.a(SourceFile:66)
at mi.f(SourceFile:119)
at mi.c(SourceFile:72)
at mh.<init>(SourceFile:31)
at mg.a(SourceFile:212)
at mg.d(SourceFile:346)
at ld.d(SourceFile:215)
at mx.a(SourceFile:280)
at ir.a(SourceFile:137)
at it.a(SourceFile:20)
at ef.a(SourceFile:164)
at ms.c(SourceFile:134)
at net.minecraft.server.MinecraftServer.u(SourceFile:529)
at lj.u(SourceFile:265)
at net.minecraft.server.MinecraftServer.t(SourceFile:441)
at net.minecraft.server.MinecraftServer.run(SourceFile:358)
at ky.run(SourceFile:617)

A detailed walkthrough of the error, its code path and all known details is as follows:
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– System Details –
Details:
Minecraft Version: 1.7.2
Operating System: Mac OS X (x86_64) version 10.6.8
Java Version: 1.6.0_65, Apple Inc.
Java VM Version: Java HotSpot(TM) 64-Bit Server VM (mixed mode), Apple Inc.
Memory: 53600 bytes (0 MB) / 129957888 bytes (123 MB) up to 129957888 bytes (123 MB)
JVM Flags: 0 total;
AABB Pool Size: 8553 (478968 bytes; 0 MB) allocated, 7685 (430360 bytes; 0 MB) used
IntCache: cache: 0, tcache: 0, allocated: 12, tallocated: 94
Profiler Position: N/A (disabled)
Vec3 Pool Size: 10277 (575512 bytes; 0 MB) allocated, 6999 (391944 bytes; 0 MB) used
Player Count: 2 / 20; [mm['DonnaShelley'/19, l='world', x=-2113.12, y=83.25, z=-1385.40], mm['IanandCam'/7021, l='world', x=-1549.51, y=59.00, z=-1050.02]]
Is Modded: Unknown (can't tell)
Type: Dedicated Server (map_server.txt)