How about making the browser more efficient so pages don't take up close to the full 128MB of available memory? That's probably where I'd start with improvements to Mobile Safari.

While a move to 256MB of memory would be welcomed over 128MB, I'm sure most people would be a lot happier with 512MB or 1GB, judging by the current performance bottlenecks. If Safari on the desktop is any indication, it's one very unforgiving and memory hogging application.