64kB seems way too little for a chip that has a 96MHz CPU and Ethernet. It's plenty for an ultra low cost microcontroller. The mbed is not one of those. Especially since Ethernet was never designed for very low power and many network applications are just asking for more memory.
I don't see the problem. People are doing TCP/IP with 2k of RAM, why would it be an issue with 64kB? MTU is usually 1500 bytes. Of course you won't be building a high-traffic webserver with this, but since the trend is ethernet connectivity for every single piece of equipment, I think ethernet connectivity on small 32-bit micro's is very useful. You don't need much RAM for basic TCP/IP control / monitoring.
This ARM Cortex M series is intended as a step-up from the 8/16-bit micro's, which are usually well below 64kB of RAM (512bytes - 8kB or so), and obviously not for something like a set-top box. It's not like there isn't enough choice of Cortex A8/A9 and ARM11 chips already, which can support tons of RAM and have much faster performance. But I'm quite sure these cost more than $7/each in 1k qty, especially if you include external RAM. For example, the cheapest Freescale ARM11 is $12 in 100 qty (price breaks don't go higher), plus the price of external RAM. And it's a BGA package, so good luck prototyping in your home lab.
What alternative for the LPC1768 would you suggest with similar price and features, but much more RAM?