Minecraft refuses to use more than 1G of RAM, even via Command Prompt
Solution 1:
That command actually starts the Launcher with 2G. To set the memory for the game itself, Click on 'Edit Profile' in the launcher:
Then check 'JVM Arguments' and enter the memory parameter there:
Solution 2:
Something else as well in addition to @Kcats post, make sure you have 64bit Java as I've seen that it won't allow you to allocate more than 1GB with 32Bit