iOS memory allocation - how much memory can be used in an application?

Blocks from separate memory allocations are not allocated contiguously (separate calls to alloc, malloc, new, etc.). Otherwise they are allocated contiguously(from the same call to malloc, ex. new float[30]). According to Apple your app risks being shut down
for memory usage when you use more than 20mb of ram. In practice however, you can get to about...

260 MB of ram on iPad 2 (Thanks RobCroll)
170-180MB of ram on devices with 512 Mb of ram total (iPhone 4, iPod touch 4g)
40-80MB of ram on devices that have 256 MB of ram (iPad, iPhone 3gs, iPod touch 3g)
25 MB on device with only 128MB of ram (IPhone 3g, iPhone 2g, iPod touch 1g-2g)

If you really "need" that much ram for a mobile application, you should really save the data to a temp file and do your processing on that. An easy way to do that is by using memory mapped files.