I had this issue today, and for me the problem was that I had allocated too much memory:
-Xmx1024M -XX:MaxPermSize=1024m
Once I reduced the PermGen space, everything worked fine:
-Xmx1024M -XX:MaxPermSize=512m
I know that doesn't look like much of a difference, but my machine only has 4GB of RAM, and apparently that was the straw that broke the camel's back. The Java VM was failing immediately upon every action because it was failing to allocate the memory.