Yes, as of current version, this memory issue only happens with Amazon S3 file system but it will not happen when using physical file system. When you upload to Amazon S3, it’s first uploaded to the memory on the server and then uploaded to S3. This is the first iteration of S3 feature and it has some shortcomings. For example, also progress bar may not be accurate (reflects only the first upload to the server and not the second upload to actual S3). So it's possible that you get "out of memory" errors when your server memory is filled.
In the next release, we will optimize uploading to S3 file system, i.e. we will make the browser upload directly to S3 and skip the server. This way uploading to S3 file system will be as fast as uploading to physical file system and there will be no memory issues.
We also plan to add a file system for Azure Blog storage in future versions (if not in the next version).