Recently I faced this problem when playing Minecraft Beta 1.7.3. I put the driver version 2.2.6.1 - still "eats" RAM, but already 250-500 MB lower than it was on the latest drivers, but performance suffered (took away 5-10 FPS).
Surprisingly, but under Linux (I tested on Linux Mint) Minecraft works amazingly well: it doesn't consume any RAM at all (somewhere 600-800 MB), and at the same time the performance is higher than on Windows. Taking into account that Linux has the latest AMD drivers (not open-source).
Maybe AMD developers should conduct a parallel study of Windows and Linux drivers to find out what are the differences in OpenGL performance on both systems?