Airadine, I solved this problem (and lots of others) by setting my php memory limit to the highest that my host will allow (that would be in your php.ini file if you have access to it) – for me it was 128M.
It took me a while longer to figure out that ANOTHER plug-in was lowering the limit I had set (XML Sitemap Generator for WordPress 3.2.9 ) – for some reason that plug-in has a default “Try to increase the memory limit to:” set to 16M. Which I learned, here, is obscenely low.
So if you have that plug-in be sure to update the php memory limit there as well.
Good luck!
L
P.S. In the meantime, you may want to save a copy of your completed newsletter in Notepad (click on view html and copy that) so you don’t drive yourself nuts making the same newsletter over and over again. <– Been there and done that!! ; )