Daniel,
I am seeing exactly the same issue. We are testing an upgrade from BODS 4.0 to BODS 4.2 SP3, my DS Designer is on exactly the same version as yours (14.2.3.549). My client PC is very similar to yours (Windows 7 32-bit with 4GB RAM). The only difference is we are seeing the 32-bit DS Designer failing with these errors, it works fine on another client PC which is running 64-bit DS Designer on 64-bit Windows 7.
Are you absolutely sure you are running the 64-bit client? I heard there was an issue with the software not matching the folder name (i.e. 32-bit DS Designer is in a folder named 64-bit, and vice versa)?
I agree it's very annoying the software should regress as it moves to higher versions, SAP need to fix this bug, it does appear to reach some kind of maximum limit on RAM consumed (which it did not do in earlier versions).