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Huge data frames?

A friend of mine recently mentioned that he had painlessly imported a
data file with 8 columns and 500,000 rows into matlab. When I tried
the same thing in R (both Unix and Windows variants) I had little
success. The Windows version hung for a very long time, until I
eventually more or less ran out of virtual memory; I tried to set the
proper memory allocations for the Unix version, but it never seemed
satisfied :]

I used read.table -- should I have used something else? Is it even
possible to work with this large files? I assume a memory-mapped
binary file would have been quite efficient (as opposed to an
in-memory parsed text file) -- is something like that even possible in
R?