I was not sure either what was this VM when I saw it first.
Searching this on google I soon realized that this is Virtual Memory Manager.
It looks like you did miss virtual memory, so Linux decided to find a good 
program to kill (linux kernel keep a score for that, OOM score I think, Out Of 
Memory score) to decide which one to kill.

You should probably:
cat /proc/meminfo (maybe post the result here)
to check if swap partition is mounted and active.

-- 
kernel freeze in 2.6.28-11 (Dell XPS M1530)
https://bugs.launchpad.net/bugs/348731
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