Parallels 7 and VM RAM Allocation

Why does Parallels 7 have an issue with allocating 8GB of RAM? I have 24GB of RAM in my Mac Pro, so there should be more than enough memory available for the VM and system processes. I see that Parallels 7 is 64-bit, so why the warning when I allocate 8GB of RAM to the VM?
 
I also want to know the recommendation as well.

My iMac has 16GB. If I don't put large amount into VM, OS X doesn't seem to utilized it all anyway.
 
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