Some players seem to have issues using spoutcraft to connect to our server. You might have not noticed that before you log in with Spoutcraft there is an ‘Option’ button. When you use this button you can modify some default settings. It seems Minecraft 1.1 is still a development build, so you should check either Always use development builds or manual build selection (in the last case select the latest minecraft version).
Also, if you have java memory issues, you can increase the allocated memory here as well, this should fix the in-game out of memory issue.