How to fix "java.lang.OutOfMemoryError: unable to create new native thread"

For Java 1.5 I get the following results assuming that the OS reserves about 120MB:
1.5GB allocated to JVM: (2GB-1.5Gb-120MB)/(1MB) = ~380 threads
1.0GB allocated to JVM: (2GB-1.0Gb-120MB)/(1MB) = ~880 threads

Java 1.4 uses 256kb for the thread stack which lets you create a lot more threads:
1.5GB allocated to JVM: ~1520 threads
1.0GB allocated to JVM: ~3520 threads