Mozilla has improved Firefox's memory usage significantly in recent time. Many Internet users still think that Firefox is using a lot of memory, but if you compare actual memory usage between different browsers, you will notice that Firefox's memory handling is excellent.
That does not mean that you may not see spikes in memory usage even if you open the same websites as someone else. One of the reasons for this discrepancy in memory usage are add-ons.
While many add-ons are memory efficient, others may increase the memory usage by a lot.
Mozilla recently analyzed memory usage of a version of Firefox without add-ons installed, and a version with the most popular add-on Adblock Plus installed.
The difference is significant, especially under the right circumstances. Adblock Plus adds an overhead to Firefox's memory usage of about 60-70 Megabyte. While that may be a lot depending on the installed memory on the computer, the difference can widen quickly under certain circumstances.
For every iframe that gets loaded in the browser, four additional Megabytes are added to the browser's memory usage. That does not appear to be much, but if you consider that some sites may make use of many iframes, it can grow quickly.
On the popular tech news site Techcunch for example, RAM usage more than doubles if the iframes on the website are activated.
The VIM Color Scheme Test page is an extreme example. Without Adblock Plus installed, Firefox uses about 370 Megabytes when the page is loaded. With Adblock Plus, that memory usage increases to almost 2000 Megabyte.
Note: The test results of my own unscientific tests are the following: 188 Megybte and 300 Megabyte without Adblock Plus installed to 340 Megabyte and 1160 Megabyte respectively with it installed.
The main issue here is that the stylesheet that Adblock Plus uses for its functionality is loaded for each iFrame. If you are subscribed to Easylist or another large list, then this is the reason why the extension uses this much memory compared to vanilla Firefox installations.
Some users have created their own custom lists to reduce it by a large margin, but that is probably not a solution that most users are willed to consider as it takes some time to implement.
A bug has been filed on Bugzilla about Adblock Plus' high memory usage. It offers additional insight into why the memory usage goes up by that much under certain circumstances. There does not seem to be a solution though for that issue at the moment, other than creating and using custom filter lists exclusively that use less information and are therefore considerably smaller in size.