DJGPP2.03 C++ problem

[Sadrok]

Whenever I try to compile or link a program (probably when iostream.h is included) it gives me:
cc1plus.exe: Cannot allocate 65536 bytes after allocating 2958032 bytes
The program has no global variables and an empty main() functions except for the return.
This is a fresh download of DJGPP so what is my problem?

[Sadrok]

Ok, I've found the problem, but now I need to sollution.
What I did was go into pure DOS ran DOSLFN (djgpp has long file names so I should use it, though DOSLFN is buggy and caused a minor problem when compiling)
I compiled and didn't get that error, I did a cannot rename error (DOSLFN) but the temp file was there and I could rename it to the proper name. This is probably because of 1) more memory available (unlikely) 2) CWSDPMI instead of Win95's DPMI
So what is the problem?
I've tried setting virtual memory, DOSPROMPT.PIF memory settings but nothing worked.
The specs on that machine ofcourse: 486 DX4 100mhz 8meg ram