Depends on what you're comparing it to.
If compared to WIn98/ME, then yes it's a hog. However, it manages its available memory MUCH better then these OSes.
If compared to Win2K, it's still a hog. However, it marginally manages better than Win2K does at default. In my opinion, Win2K can be tweaked to the point where it eats XP alive.
In my experience, XP was just a bloated Win2K that included most of the useful tweaks you can get for Win2K. I did not see it as a step up at all.