Ran into an issue today on a Windows 2003 Citrix farm.  As soon as about 30 users logged into a server, any user thereafter received the following error:

Windows cannot load the user’s profile but has logged you on with the default profile for the system.

Detail: Insufficient system resources exist to complete the requested service.

Event IDs 1505 and 1508 errors appeared in the application log.

The server had plenty of memory left, so it wasn’t actually that the server ran out of RAM.  It was just an issue with how Windows was allocating it.  After some research, I found this article:

http://support.microsoft.com/kb/935649

I fired up regedit, made the change and rebooted and then watched as the server loaded up with users.  No issues thereafter.  However, when I rolled the change out to the other servers I did encounter some strange issues.  I know that I imported the registry change on a couple of the servers, but after reboot they reverted back to the original config.  My theory is that when this issue is encountered, Windows can no longer save changes made to the registry.  So if you apply this change, you might want to reboot the server, apply the change, then reboot the server again.  The just to be safe, confirm that the change is still there.  Here what it looks like after you make this change: